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NCC issues if turning 65 in 2016/17


Thursday 29 September 2016

The Federal Treasurer’s announcement on Thursday 15 September 2016 regarding further superannuation reform measures re-opens the door for non-concessional superannuation contributions (NCCs), after more than four months of uncertainty on the issue.

Clients who reach their 65th birthday in 2016/17 will have special interest in the proposals, as this income year may be their final opportunity to make NCCs. These clients may be able to contribute up to $540,000 before 1 July 2017, depending on their eligibility to contribute to superannuation.

To accept a contribution from a member aged 65 or more, the trustee of a superannuation fund must be satisfied that the member has been gainfully employed for 40 hours in 30 consecutive days in the income year in which the contribution is made – this is commonly referred to as the ‘work test’.

Although it was proposed in the 2016 Federal Budget to remove the work test for those age 65 to 74, that proposal was removed in the 15 September announcement.


Example: approaching age 65

Joan’s 65th birthday is 10 February 2017. She is interested to understand her NCC options in 2016/17 and later years.

Issue 1 – the work test

From Joan’s 65th birthday she is required to satisfy the work test. Prior to her 65th birthday Joan can make super contributions without the need to satisfy the work test.

Issue 2 – how much can Joan contribute?

The 15 September announcements mean that the annual NCC cap in 2016/17 remains at $180,000.

As Joan will be under age 65 for part of the 2016/17 income year, she can bring forward an additional two years of her future entitlement to contribute at this level. So she can contribute up to $540,000.

She will need to either make this contribution before her 65th birthday or have met the work test if contributing after her birthday and before 1 July 2017.

Issue 3 – later income years

If Joan contributes the maximum $540,000 in 2016/17, she will be unable to make any further NCCs in 2017/18 and 2018/19.

To make an NCC in any income year after her 65th birthday Joan will be required to meet the work test in that income year before making the NCC.

Joan will not be entitled to use the bring forward option after the 2016/17 income year, so she will be restricted to the proposed annual NCC limit of $100,000, assuming her previous 30 June total super balance is not more than $1.6 million.

The Treasurer also announced that legislation to implement these measures would be released by the end of the year. Financial services professionals should bear in mind that further changes to these proposals are possible.


Client letter template

Macquarie have created a client letter template that you might find useful for client communications. We are providing this material to you to assist you in educating and advising your clients. If you use the template letters you will be providing personal financial advice to the clients to whom you send the letters, so you should consider and customise the content of your letters accordingly

Download the client letter template - clients turning 65

Download the client letter template - clients over 65

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