Contributions for 75 year olds – how do they work?

Turning 75 is a big deal when it comes to super contributions. There comes a point shortly afterwards when it’s pretty much impossible to make contributions other than “mandated” (Super Guarantee) or downsizer contributions. But there are nuances.

First the simple part – the critical date is not actually the member’s birthday, it’s the 28^th of the next month.

That means someone who turns 75 in (say) August 2023 is eligible to keep making contributions up until 28 September 2023. This could be contributions they make themselves or employer (including salary sacrifice) contributions.

Or something even more niche – someone who turns 75 in June gets up until 28 July (ie, the following financial year).

But there are some traps here.

First, a great thing about some changes made from 1 July 2022 is that members no longer need to meet a work test to contribute to super.

That means our hypothetical member turning 75 in August 2023 (let’s call them Dave) can make contributions up until 28 September 2023 without worrying about a work test. His friend Steve (who turns 75 in June 2024) gets to contribute up until 28 July 2024 without worrying about work tests.

Of course, if either of them wants to claim a personal tax deduction for their contributions, they would need to meet a work test. That only needs to happen some time before the end of the financial year in which the contribution is made. So for Dave’s contributions in September 2023, that’s any time up until 30 June 2024. For Steve’s contributions in July 2024, it’s any time up until 30 June 2025.

(Don’t forget that if they have less than $300,000 in super, they might be able to use the special “work test exempt” rules if they met the work test in the previous year and haven’t used these rules before. But we’ll ignore that for now.)

There’s also a trick when it comes to the operation of the bring forward rules for non-concessional contributions.

To start a bring forward period, the member has to be under 75 at the start of the year. So let’s imagine for a moment that neither Steve nor Dave have made any non-concessional contributions for the last few years and both of them have low enough balances to commence a three year bring forward period (currently that means they’d need to have a total super balance less than $1.68m at 30 June 2023).

So could Dave contribute $330,000 in 2023/24? Absolutely – he was only 74 at 30 June 2023 and as long as he makes the contribution before 28 September 2023, he’s fine. And of course there’s no work test required.

What about Steve? (Let’s assume for now that there is no change to contribution caps or the $1.68m threshold at 1 July 2024.)

Unfortunately Steve will already be 75 at 30 June 2024. That means even though he’s eligible to make contributions up until 28 July 2024, he can’t initiate the three year bring forward rules in 2024/25.

In Steve’s case, the situation would be slightly different if he made a contribution in 2023/24 and initiated the rules then. For example, imagine he contributed $150,000 in June 2024. That’s enough to lock in a 3 year period (2023/24, 2024/25 and 2025/26) where he can contribute up to $330,000 in total (again, assuming no changes in caps or thresholds). Since he can’t make any personal contributions at all beyond 28 July 2024, in practical terms he’d have to finish by then. So he could, for example, contribute $180,000 ($330,000 less the $150,000 contributed in 2023/24) in early July 2024.

Notice how there wasn’t a problem going over $110,000? What was important was that he had already triggered the bring forward period in the year he turned 75.

Of course he’d have to do the same checks as everyone else when it comes to his July 2024 contributions. For example, even though he’s midway through a bring forward period, he would still get his cap re-set to $nil (rather than $330,000 less $150,000 being $180,000) if his total super balance was $1.9m or more at 30 June 2024. This is one of the reasons people using the bring forward rules often try to use the full amount in one year rather than splitting it over two – they don’t want to get caught out half way through and find they can’t “finish off” their three year entitlement.

Turning 75 can be slightly complicated when it comes to super contributions – definitely it’s a time to plan carefully and get the numbers right.

For more on contributions, there is a wealth of information in the Heffron Super Companion. Click below to find out more: