Case study ? I?m retired can I make super contributions to my SMSF?

Jack recently retired from his full time job as a corporate accountant at age 65 and nowadays offers part-time consultancy services from his Sydney home. He has just inherited quite a substantial sum of money from his inlaws. Jack, like any other SMSF member who would be in his position, wants to know whether he can make non- concessional contributions to his self managed superannuation fund since he is still working. Can he? If so what are the non concessional contribution rules for superannuation?

Non-Concessional Contributions and Superannuation

Non-concessional contributions are superannuation contributions made from after-tax income. They used to be referred to as ?undeducted contributions? but are popularly known as ?after-tax contributions?. Tax deductions cannot be claimed on non-concessional contributions.

About Working And Not Working

Let?s get back to Jack?s situation. Unless you are age 65 or over, you do not have to be working to make super contributions including non-concessional contributions. You can be employed, self- employed and even unemployed. For those of you with ages ranging between 65 and 75, you can actually make non-concessional contributions provided that you satisfy a work test in the financial year that you contribute.

Passing The Work Test

You will be deemed to have passed the work test if you provide sufficient evidence that you have worked for a minimum of 40 hours in any 30 day period of that financial year you intend to make non-concessional contributions. Since Jack is 66, he can actually make non-concessional contributions as long as he passes the work test. The source of cash while making non-concessional contributions is irrelevant. The cash can be from employment income, lotto wins and as in the case of Jack, inheritance.

Those Aged 75 And Over

Those aged 75 and over can no longer make super contributions. You can only make superannuation contributions till the age of 74. This is except when you make a contribution after turning 75 and ensure that the contribution is made before the 28th day of the month following the month that you turn 75.

Bring forwarding provisions

Also note that the bring-forward rules allows a person to make up to $450,000 (rather than $150,000) annual non-concessional contributions for the 2013/2014 financial year, then have to wait another three years before they can make additional non concessional contributions. This applies to individuals under the age of 65. The rules are always changing so check with a financial planner or contact us for more information.

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Disclaimer: The information on this site is general in nature and not financial advice. Visitors should consider obtaining independent advice before making any financial decisions.