4. Make sure you meet the work test if you’re over 67
If you’re 67 or over, you’ll need to make sure you meet the work test before you make a personal contribution to your SMSF.
To meet the work test, you need to have worked for at least 40 hours within 30 consecutive days in the financial year you make the personal contribution.
Once you reach 75, keep in mind you generally won’t be able to make a personal super contribution, regardless of your work status.
If you’re a recent retiree aged 67 or over, you can use a work test exemption to keep making personal super contributions for the financial year if you met the work test in the financial year before the contribution year, provided your total superannuation balance just prior to the year of contribution is less than $300,000 and you did use the work test in a previous financial year.
You can check the age restrictions on SMSF contributions at the ATO website.
5. Make a downsizer contribution
If you signed a sales contract after 1 July 2018, you can contribute up to $300,000 of the sale proceeds from downsizing your home to your superannuation.
To be eligible, there are conditions to be satisfied, including the following:
- You need to be at least 65 at the time of your contribution
- You need to have owned your home for at least 10 years
- The contract for the sale for your home needs to have been exchanged on or after 1 July 2018
Keep in mind a downsizer contribution can only be made once.
Please refer to the ATO website for more information on downsizer contribution.
6. Don’t exceed the transfer balance cap
From 1 July 2021, there’s generally a $1.7m transfer balance cap on the super amount you can transfer over to the tax-free retirement phase.
Super balances above this cap need to either be held in an “accumulation phase”, where earnings are taxed at up to 15%, or removed from your super, where assessable earnings are taxed at your marginal tax rate.
7. Review your current pension arrangements
If you start an account-based pension, you need to take out at least the minimum pension amount during the financial year. If you don’t, the earnings you make on all the assets supporting your pension may be taxed at 15%, rather than being completely exempt. Additionally, the account-based pension will be taken to have ceased at the start of the income year for income tax purposes, and any income received during the year will be subject to assessability at your marginal tax rates.
The minimum payment is a percentage of your pension account balance as at 1 July each financial year, and is fixed for the year. If you start a pension during the year, it’s a percentage of the account balance as of the start date, and pro rata based on the number of days left in the financial year. If your pension account started on or after 1 June, the minimum pension amount is set at 0.