Can you salary sacrifice into super and claim the pension?

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Lurelle is approaching pension age and wants to know about the pension while working.

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Q. Lurelle
I am approaching pension age. I am still working permanent part time and I currently salary sacrifice $200 per fortnight into my superannuation. My question is: would I be able to receive the full amount (or partial amount) of aged pension while continuing to work, albeit less hours, and sacrifice the $200 per fortnight to build up my super account?

A. There are age-related conditions under which your super fund can accept contributions.

But before we get to those, it is unlikely that contributions salary sacrificed into your superannuation would continue to be of benefit if you reduced your hours to the point where you were still able to claim the Age Pension.

According to moneysmart.gov.au, making extra concessional contributions to superannuation is only tax effective if you earn more than $37,000 per year. However, you may want to consult a financial adviser to confirm your exact situation.

Going back to the official rules about contributions that are allowed, if you are 67 to 74 years of age you will still need to meet the work test or satisfy the work test exemption criteria in order to make a contribution to your superannuation and claim a tax deduction.

To satisfy the work test, you must work at least 40 hours during a consecutive 30-day period each income year in order for your fund to accept a personal super contribution for which you can claim a deduction.

To meet the work test exemption criteria, you must have:

  • satisfied the work test in the income year preceding the year in which you made the contribution
  • a total super balance of less than $300,000 at the end of the previous income year
  • not relied on the work test exemption in a previous financial year.
     

Do you understand the rules about contributing to super after you have reached retirement age? Are they too complicated?

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Written by Ben

8 Comments

Total Comments: 8
  1. 0
    0

    I am just over age 67, and no longer able to work. But I would very much like to add to my super – but am not permitted to. Instead I have to take some out (have now reduced this from the mandatory 5% down to 2.5%). I am well under the allowable threshold – why are we discriminated against from doing this? If I had a casual job – then yes, I would be allowed.

    • 0
      0

      That’s a good question SunntOz. I can’t 7nderstand why we not allowed either.

    • 0
      0

      Why would you worry about all that at age 67? I am a few years older and I find I am using less money than at age 67; maybe I am lucky with not many medical expenses but I still manage to pay private health premiums for the two of us. Spend some money and do not worry about accumulating more.

  2. 0
    0

    I was of the understanding that cut off age to contribute to my super was 65 unless I met the work test . Is this still the case .? Your article says contributing to super is until 67yrs , which is correct?

    • 0
      0

      The article is correct, from 1/07/2020 it changed to allow people aged 65 and 66 to contribute to Super without having to satisfy the work test, which now kicks in at age 67.

  3. 0
    0

    Thankyou McDaddy . Where can i find this new ruling . I was advised by my super fund that i should have acted before 65 years old.


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