I have had three calls this week on the subject of  making contributions for people who turned 65 this year and want to make non-concessional (after tax) contributions to their funds. I have had to tell one to reject the contribution already made. one to go do some work and the other to relax. The lessons to learn are; do not listen to friends, don’t rush in and seek professional advice from your accountant, financial planner or if you are really smart a SMSF Specialist Advisor™.

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• If you are 64 then you can still make a contribution of up to the $540,000 max up to June 30^th as long as long as you have not triggered your “bring forward” cap previously.
• If you have turned 65 this year already then you can still make a contribution of up to the $540,000  max up to June 30^th as long as you meet the work test this year (40 hours in 30 days).
• If you have turned 65 this year already and have not met the work test yet, then you cannot make a contribution until after you meet the work test this year (40 hours in 30 days).

So here is how each of my callers found my advice essential to making their decision.

Client 1

He turned 65 in January 2015 and had fully retired but made a large contribution on the basis he would be managing their son’s business for 2 weeks in June 2015 and would meet the work test easily. As he had not met the test at the time of contribution I had to tell him as SMSF Trustee, he had to reject the contribution and return the funds to his personal account. They can contribute the funds in late June after meeting the work test.

Client 2

He is fully retired and turned 65 in March and at least called me before making the contribution. He has not met the work test yet but has an offer of part-time work in the “Big Green Sheds”.  Great way of meeting the 40 hours in 30 day Work Test and I personally would probably pay them to work there as I spend so much time and money in there already.

Client 3

She is still working but turns 65 next week and sent through an urgent request to sell down shares in her personal name and so I called to ask why and “her friend had told her she could not use the bring forward rule after her 65th birthday.” So she had panicked and decided to sell down what are excellent shares but with huge capital gains. I had to tell her to relax and take a breath! We have a term deposit maturing in the May and can use that to make the contribution and avoid the estimated $54,000 CGT on the sale of the shares. As she running her own business, she has met the work test and can make her $540,000 contribution anytime up to June 30th 2015.

 So here is a breakdown of the specific contribution rules applying at various ages.

If you turn 65 in a financial year the question of whether you are able to make a contribution to superannuation depends on:

• the amount you wish to contribute;

• whether you wish to claim a tax deduction for all or some of the contribution;

• whether you need to meet a work test during the year;

 Here are some tables that put it all together.

Table 1: Non-concessional Contributions

Table 2: Personal Concessional Contributions*Once a person reaches 75 they can contribute up until 28 days after the month in which they turn 75.

Are you looking for an advisor that will keep you up to date and provide guidance and tips like in this blog? Then why now contact me at our Castle Hill or Windsor office in Northwest Sydney to arrange a one on one consultation. Just click the Schedule Now button up on the left to find the appointment options.*Once a person reaches 75 they can contribute up until 28 days after the month in which they turn 75.

Liam Shorte B.Bus SSA™ AFP

Financial Planner & SMSF Specialist Advisor™

Tel: 02　98941844, Mobile: 0413 936 299

PO Box 6002 BHBC, Baulkham Hills NSW 2153

5/15 Terminus St. Castle Hill NSW 2154

Corporate Authorised Representative of Viridian Select Pty Ltd ABN 41 621 447 345, AFSL 51572

This information has been prepared without taking account of your objectives, financial situation or needs. Because of this you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation and needs. This website provides an overview or summary only and it should not be considered a comprehensive statement on any matter or relied upon as such.

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