The amendment to the superannuation rules allowing individuals to make non-concessional contributions up to the age of 75 without having to satisfy a work test from 1 July 2022 contains a subtle difference to the way the legislation operated previously.
When this change in the law takes effect, SMSF members will only be able to make non-concessional contributions up to 28 days after the month they turn 75.
“This is a shift [compared] to what the current rules are when we think of someone reaching [the contribution age limit] of age 67,” Smarter SMSF chief executive Aaron Dunn noted.
“[Currently] if someone has actually met a work test in [the year in which they turn 67], then it in essence gives them the ability to make [a non-concessional] contribution at any stage throughout that year or, subject to their TSB (total super balance), on a work test exemption basis from where they worked in the previous year.
“[But] focusing on [the amended rules] once the individual has hit the age of 75, we have a drop-dead date here that they will not be able to make any further contributions into the fund.”
Dunn pointed out the new parameter included in the legislative amendment also has implications as to how a member can use the non-concessional contributions bring-forward provisions.
To this end, should a person be eligible to use the bring-forward provisions, they will effectively have unfettered access to them when they are aged 72 and 73.
However, they will only have 28 days from the end of the month in which they turn 75 to make any final bring-forward non-concessional contribution they still need to make.
The changes to the contribution rules were contained in the Treasury Laws Amendment (Enhancing Superannuation Outcomes For Australians and Helping Australian Businesses Invest) Bill 2021, which was introduced into the House of Representatives in October last year and received royal assent in February.