Pensions, Regulation, Retirement, Superannuation

Age issue curbs bring-forward rule

NCC bring-forward rules

The non-concessional contribution bring-forward rules can only be used if a person is under 75 during the relevant financial year.

The proximity of 30 June with regard to when an individual reaches age 75 will limit their ability to qualify for the use of the non-concessional contribution (NCC) bring-forward rules, a technical manager has said.

The most recent amendment to the work test took effect on 1 July 2022 and stipulated a person under the age of 75 would no longer have to satisfy the work test to be eligible to make personal non-deductible contributions, including the ability to use the NCC bring-forward rules.

Under section 290-165 of the Income Tax Assessment Act a superannuant can take advantage of the new work test waiver up to 28 days after they turn 75.

However, Accurium SMSF manager Matthew Richardson reminded practitioners the full 28 days will only apply if the person’s birthday falls before 2 June for the non-concessional contribution bring-forward rules.

“[Under] the contributions rules in the [Income Tax Assessment Act], section 292-85, to use the bring-forward rule for non-concessional contributions the individual must be under [age] 75 at any time in the income year,” Richardson told TechHub webinar attendees earlier this week.

He confirmed this means a person who turned 75 on 30 June 2023 would not have until 28 July 2024 to use the non-concessional contribution bring-forward rules.

“They haven’t actually been [under] 75 at any point during the 2024 income year, so while they can still make a contribution up until 28 July 2024 under their [contributions] cap, they actually can’t use the bring-forward rule,” he noted.

Accurium head of education Mark Ellem said the scenario highlighted the need for SMSF trustees to take into account all of the legislative parameters when deciding whether they can accept contributions from fund members.

To this end, Ellem noted the Income Tax Assessment Act can sometimes be overlooked, seeing it focuses on the contributions caps, as opposed to the Superannuation Industry (Supervision) Act and Regulations, which contain the rules as to when a trustee can receive a contribution.

The most recent change to the work test rule was originally included in the 2021 federal budget.

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