For SMSF members who are over 65 years of age and no longer working, there are very few options available for them to contribute to superannuation.
Members of this age are no longer able to use the bring forward provisions (subject to the circumstances below), and they must satisfy a work test in order to be able to make any non-concessional contribution.
With the new rules surrounding the total superannuation balance, if their balance is over $1,600,000, then the ability to be able to contribute non-concessional contributions is removed entirely.
Downsizing Post Age 65
The most viable option for a member over the age of 65 who is not working, irrespective of their total superannuation balance, is the ability to make a “downsizing” contribution.
Essentially, a member (or spouse) must sell a property which has been owned for at least ten years, and either the member (or spouse) is able to claim a full or part main residence exemption on the sale. In these circumstances, both individuals could contribute up to $300,000 each to super as a non concessional contribution.
Contributions Post Age 65
For members who are between 65 and 74 years of age and no longer working, there is also an opportunity to contribute to superannuation if their balance is less than $300,000. In the first year that these members no longer satisfy a work test (so long as their balance is below the maximum threshold), they are able to contribute either concessional, non-concessional or catch up contributions.
Increase in access to bring forward 65 – 66 year olds
Announced as part of the 2019 Federal Budget, this strategy allows additional contributions to be made to super (subject to transfer balance cap restrictions) and means that strategies (such as withdrawal and re-contribution strategies) can be employed for longer. The increase in access to the bring–forward rules are also accompanied (assuming legislated) by a corresponding increase in the age to which the work test applies. If legislated, these rules will apply from 1 July 2020.
Note: While these rules have essentially lifted the “bring forward” and work test age thresholds up to 67, there is no corresponding increase to the downsizing contribution age threshold (which will remain at 65).
About Shartru Capital group
The Shartru Capital group is an Australian boutique investment and advisory firm. Shartru Capital is a significant investor in a number of businesses including Shartru Wealth Management.
Shartru Wealth Management is the financial advice and licensee business within the Shartru Capital group.
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Disclaimer: Published by Shartru Wealth Management Pty Ltd. ABN 46 158 536 871 AFSL 422409. The advice is general advice only and we have not considered your personal circumstances. Before making any decision on the basis of this advice you should consider if the advice is appropriate for you based on your particular circumstance