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Work test

Section: 2.4

The work test must be met in order for the trustee of a super fund to accept member contributions or voluntary employer contributions if the member is age 65 or over at the time of the contribution, but is under the maximum age for that type of contribution.

The work test does not apply to members who, at the time of the contribution, are under the age of 65.

A member meets the work test if the member has been gainfully employed for at least 40 hours in a period of not more than 30 consecutive days in the financial year.
  • The work test, if applicable, must be met prior to the contribution being made.
  • The trustee cannot take prospective employment into account. The member must have worked at least 40 hours within 30 consecutive days in the financial year before the trustee can accept the contribution.
  • Mandated employer contributions may be made at any age without the member meeting the work test.
  • The work test can be satisfied anywhere in the world.
2018 Federal Budget proposal

Work test exemption for retirees: effective 1 July 2019

People aged 65 to 74 that have a total superannuation balance under $300,000 will be able to make voluntary member or voluntary employer contributions for 12 months from the end of the financial year they last satisfied the work test. This is intended to give people with low superannuation balance more time to make contributions to super after they have retired and finished working. Note, the normal contribution caps will still apply.

For example, if a client retired on 30 March 2020, they would be able to make voluntary concessional and/or non-concessional contributions during the 2020-21 financial year where their total superannuation balance was under $300,000 on 30 June 2020.

At the time of writing this proposal is not law yet.

Gainfully employed

Gainfully employed is employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment.

The concept of 'gain or reward' envisages receipt of remuneration such as salary or wages, business income, bonuses, commissions, fees or gratuities, in return for personal exertion.

Voluntary or charity work arrangements are unlikely to satisfy the definition of gainfully employed, even where they involve the provision of meals or reimbursement of expenses.

The work test and periods of leave

It is unclear whether a period of paid leave is considered as a period of gainful employment. According to APRA Prudential Practice Guide SPG 270, released in April 2012, APRA regarded periods of authorised leave, whether paid or unpaid, and actually taken by the member as leave, as periods of gainful employment in applying the gainful employment test for contributions in respect of members aged 65 or more. Therefore, where a client was working full time and took six weeks of annual leave at full pay, they were considered to remain gainfully employed on a full time basis during their period of leave.

However, an updated version of SPG270 released in November 2013 removed all references to whether periods of leave could count as periods of gainful employment.

It is important to note that lump sum leave payments received after a client's termination of employment do not count as a period of gainful employment.

Last modified: Tuesday, April 30, 2019