The Coach: Ways to contribute to superannuation at any age

To make an eligible spouse contribution, the contributing spouse can be of any age. Picture; iStock

Question: Could you please explain under what circumstances I am able to make a contribution to superannuation. I am 68.

From July 1 this year the work test was abolished until a person reaches the age of 67. In the financial year the superannuation fund member reaches age 67, personal contributions can be made prior to reaching that age without meeting the work test of 40 hours in 30 consecutive days in the financial year prior to making a contribution to super.

There are three types of superannuation contributions that can be made once a person reaches 67 years without the requirement to meet the work test. They are the superannuation home downsizer contribution, ceasing work contribution and employer contributions made for the superannuation guarantee or as required as part of an industrial award.

Home downsizer contributions can made after the sale of a person’s main residence which has been owned for at least 10 years. The person must be 65 or older and a contribution of up to $300,000 can be made within 90 days of the property settlement. The person’s spouse may also be eligible to contribute up to $300,000 if they are 65 or older. There is no upper age limit.

Ceasing work contributions are permitted on a once-only basis after the super fund member has reached 67, in the year after they have ceased work. These rules allow a person to make both concessional and non-concessional contributions providing they have a total super balance of less than $300,000 on June 30 in the previous financial year. These contributions can be accepted up to 75.

Regardless of how old an employee is, there are no work tests or age limits for compulsory employer contributions for those aged over 65. Obligatory employer contributions include super guarantee contributions or those made under an industrial award. However, a work test must still be met if the employee wishes to make a salary sacrifice to super between 67 and 75. After that time, no further salary sacrifice contributions can be made to super.

Please note that if your combined super and account-based pension is valued at greater than $1.6m at July 1, 2020, regardless of your age, you will be ineligible to make after tax non-concessional contributions with the exception of the home downsizer contribution.

Question: Am I able to make a contribution to my spouse’s super fund and what are the advantages?

Contributing spouses are entitled to make after tax or non-concessional contributions to the superannuation account of your spouse.

Spouse for this purpose includes individuals who although not married live with the contributing spouse in a relationship as a couple.

An individual who makes a super contribution to their spouse may be eligible for a tax offset of up to 18 per cent of the contribution up to a maximum offset of $540 if the spouse recipient’s income is less than $37,000. To claim the spouse contributions tax offset, the contributing spouse completes the relevant section in their tax return.

To make an eligible spouse contribution, the contributing spouse can be of any age. However the receiving spouse must be under 67 or if aged between 67 and up 74 must be employed for at least 40 hours in a period of not more than 30 consecutive days in the financial year.

Contributions cannot be made where the receiving spouse’s total super balance on June 30 of the preceding financial year is $1.6m or more.

Spouse contributions may assist in equalising the super account balances between a couple.

Andrew Heaven is an AMP financial planner at WealthPartners Financial Solutions.

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