Turning 75 and Super Contributions: What You Need to Know 💸🧐
Turning 75 is a significant milestone for super contributions. After this age, making contributions other than “mandated” (Super Guarantee) or downsizer contributions becomes nearly impossible.
Here are the key points and some nuances to consider.
Key Date: 28th of the Next Month
- The critical date isn’t your birthday but the 28th of the following month.
- If you turn 75 in August 2023, you can make contributions until 28 September 2023. This includes personal and employer contributions, such as salary sacrifice.
- If you turn 75 in June, you have until 28 July (the next financial year) to contribute.
Work Test Changes
- Since 1 July 2022, you no longer need to meet a work test to contribute to super.
- For example, if Dean turns 75 in August 2023, he can contribute until 28 September 2023 without a work test.
- Larry, who turns 75 in June 2024, can contribute until 28 July 2024 without a work test.
Claiming Personal Tax Deductions
- To claim a personal tax deduction, you must meet a work test before the end of the financial year in which the contribution is made.
- Dean has until 30 June 2024 to meet the work test for his September 2023 contributions.
- Larry has until 30 June 2025 for his July 2024 contributions.
- If you have less than $300,000 in super, you might use the “work test exempt” rules if you met the work test the previous year and haven’t used these rules before.
Bring Forward Rules for Non-Concessional Contributions
- To start a bring forward period, you must be under 75 at the start of the year.
- If neither Larry nor Dean made any non-concessional contributions recently and their total super balance is less than $1.68m at 30 June 2023, they might consider the bring forward rules.
- Dean can contribute $330,000 in 2023/24 as long as he does it before 28 September 2023.
- Larry can’t start the bring forward rules in 2024/25 because he will be 75 at 30 June 2024.
Example Scenario
- If Larry contributes $150,000 in June 2024, he can start a three-year period (2023/24, 2024/25, and 2025/26) where he can contribute up to $330,000.
- Since he can’t make contributions after 28 July 2024, he would need to complete his contributions by then, like contributing $180,000 in early July 2024.
Important Considerations
- Even if you’re in a bring forward period, your cap can be reset if your total super balance is $1.9m or more at 30 June 2024.
- Many people prefer to use the full bring forward amount in one year to avoid getting caught out halfway through.
Turning 75 adds some complexity to super contributions, making it essential to plan carefully and get the numbers right.
This article was first published by Meg Heffron of Heffron Consulting.
