A financial services technical team has reminded practitioners how strictly the rules governing the age limit applying to superannuation contributions are interpreted.
The superannuation rules dictate an individual can only voluntarily pay money into a retirement savings vehicle, such as via a non-concessional contribution, during the year in which they are under age 75.
In addition, this rule allows a person to take advantage of the non-concessional contribution three-year bring-forward provision as well as long as they satisfy this age restriction.
Colonial First State head of technical services Craig Day noted some super fund members have tried to satisfy this qualification with regard to a subsequent financial year based on the specific details of their birth if they are turning 75 on 1 July.
“So what if the client was born at 5pm on 1 July? So [they say:] ‘I’ve actually got a birth certificate that says [I] was born at 5pm [on 1 July], but [I made] the contribution at 9am in the morning,’” Day posed to attendees of the most recent First Tech podcast.
“We’ve had people argue this that at 9am in the morning they are still under age 75 at the time the contribution was made and that should be okay, shouldn’t it?”
Colonial First State senior technical services manager Linda Bruce acknowledged it was a logical argument, but unfortunately would be unsuccessful when examining the relevant law.
“For legal purposes in the Acts Interpretation Act 1901 [it stipulates] a person is taken to have reached a particular age at the start of their birthday. That is 12am,” Bruce explained.
“So for legal purposes, even if this client was born at 5pm on that day, they are taken to have reached their 75th birthday at midnight on 1 July. Therefore they cannot be under age 75 at any point of that date for SIS (Superannuation Industry (Supervision)) purposes.
“As a result, it is not possible for them to [make a non-concessional contribution or] trigger the bring-forward rules in this particular scenario.”
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
Articles by Darin