The federal government has released draft legislation and regulations that will provide a one-year exemption from the work test for super contributions to allow recent retirees to boost their super balances.
Currently, individuals aged 65 to 74 must work a minimum number of hours during a particular period in the financial year to continue making voluntary contributions to super.
The Treasury Instruments Winter 2018: Work test exemption for recent retirees exposure draft regulations will amend the Superannuation Industry (Supervision) Regulations 1994 and Retirement Savings Accounts Regulations 1997 to allow retirees to make voluntary contributions to their super for 12 months from the end of the financial year in which they last met the work test.
“This is achieved by allowing regulated superannuation funds and RSA (retirement savings account) institutions to accept such contributions in respect of such members or RSA holders, without contravening relevant regulatory restrictions that would otherwise apply,” the explanatory statement for the draft regulations said.
The regulations commence on the first 1 January, 1 April, 1 July or 1 October to occur after the day the regulations are registered.
The explanatory statement highlighted the interaction between bring-forward arrangements and the work test exemption prior to the amendments proposed by this schedule.
The explanatory memorandum for the Treasury Laws Amendment (Measures for a later sitting) Bill 2018: Work test exemption for recent retirees said generally members aged 65 to 74 must satisfy the work test during a financial year in order to make contributions, but the amendment may change that.
“The interaction between the bring-forward arrangements and the work test exemption may allow some individuals (transitioning between age 64 and 65) to bring forward up to three times the annual non-concessional contributions cap in a financial year in which the individual did not satisfy the work test,” it said.
“It is not intended that the work test exemption be used to provide benefits equivalent to providing an additional three years to make voluntary superannuation contributions.”
The application date of the proposed changes is set for 1 July 2019. Treasury is accepting submissions in response to the consultation papers until 26 October.