Craig Hall of NICRI helps a couple approaching 65 clarifiy their options contributing to their SMSF.
YOURLifeChoices member Vince and his wife are approaching 65 and want to know what impact this will have on their SMSF. Craig Hall of NICRI aims to clarify their options.
I have a question re SMSF's and would really appreciate it if your organisation can give me the correct answer. My wife and I have a SMSF of which I am the trustee and there is only the two of us in it. Can we still contribute to it and buy shares to put into the SMSF after we are 65 years old or are there conditions?
A. Provided by Craig Hall, NICRI
I refer to your enquiry regarding contributions to your Self Managed Superannuation Fund (SMSF). Contributions to superannuation after reaching age 65 requires the member meeting a 'work test' of 40 hours within a 30 day period for which the member receives some remuneration. This means that if the work test is met then contributions can be made (caps apply) whether as cash or as shares transferred into the fund. The current 'Non-Concessional' contribution cap for those who have reached 65 is $150,000 per financial year.
If the member has reached 65 and is unable to meet the work test then it is still possible for the fund itself, using existing money within the fund, to purchase shares. Shares can be bought and sold by the fund just like an individual can.
If the member is under age 65 then there is no work test, although contribution caps still apply. The current 'Non-Concessional' contribution cap for members under age 65 is $150,000 but the use of the 'bring forward' rule is available which effectively allows Non-concessional contributions of $450,000 to be achieved. Please note that when considering the use of the 'bring forward' rule that the conditions be investigated carefully as penalty tax applies if the cap is exceeded. We suggest that as a trustee you consult with the Australian Taxation Office for further information on this matter.
We note your comment that you and your wife are members of the fund, but stated that you are the trustee. SMSF's require that all members must be a trustee of the fund or if a corporate trustee, directors of the company.
I hope that this information has been helpful and if you have any further questions please don't hesitate in contacting NICRI on 1800 020110 or via email at firstname.lastname@example.org.
It is important to note that the National Information Centre on Retirement Investments Inc (NICRI) does not provide or imply financial advice. Any information provided is on our understanding of legislation and we suggest that you confirm details with relevant government departments and seek professional advice before proceeding.