Have you really met the work test retirement definitions

Created on March 11, 2016 7:04 pm

How does the work test apply again?

If you are under 65 you are able to contribute to your superfund without having to satisfy a work test. If you are 65 or over then, for your super fund to accept contributions for members (either concessional or non concessional contributions), a work test must be met prior to the contributions being made.

The work test is satisfied when you are:

  • employed or self-employed in an business, trade or profession ; and
  • you receive salary/wages, directors fees, bonuses/commissions, business income in return for physical exertion; and
  • your employment is for at least 40 hours within no more than 30 consecutive days (in the year the contribution is to be made prior to the contribution being made).

Examples where the work test is not met:

  • volunteering for a charity, local hospital etc
  • baby-sitting grandchildren
  • you personally own residential/commercial properties and you look after their maintenance and collection of rent – this is because you are not in the business of property management and rental

Examples where the work test is met:

  • your family trust owns residential/commercial properties and you are employed by the trust and receive a salary to look after their maintenance and collection of rent
  • the work test can be met with work performed overseas, not just in Australia

It’s time to retire – but can I really take money out of super?

Depending on your age, a different “retirement” definition applies and this will determine if you can withdraw money from your super fund. Below are the definitions you will need to satisfy should you wish to access your superannuation funds.

Aged 55 and less than age 60

  • you’ve met your preservation age*; and
  • ceased gainful employment ie. stopped meeting the above work test; and
  • have no intention of returning to work for 10 hours or more each week

Aged 60 and less than age 65

  • you’ve met your preservation age*; and
  • ceased gainful employment ie. stopped meeting the above work test

Aged 65 and over

  • you are deemed retired irrespective of your working status (you can, however, continue to contribute to your superfund if you pass the work test as above).

* Preservation Age: this ranges between age 55 to 60 and depends on where you were born between – before 30 June 1960 to after 1 Jul 1964.

What documentation is required to substantiate my retirement?

  • Genuine termination of employment
  • Statutory declaration to confirm intention not to work again for more than 10 hours per week

Can I retire then return to work?

Yes, however any subsequent contributions after the retirement date cannot be accessed until a new retirement definition is met. For example, you retire from your full time work as an architect then you retire from your directorship of the family trust where you managed the investment portfolio and were in receipt of a wage.

As always, if you want to discuss the ability to contribute to, or access your super fund balance, please contact us to discuss.