The change to the work test to be implemented from 1 July 2022 will improve the ability of SMSF spousal members to address any significant discrepancy in their member balance, a technical expert has said.
Under recently passed legislation, individuals aged between 67 and 75 will no longer have to pass the test of having to work 40 hours in 30 consecutive days to be able to make non-concessional contributions.
SuperConcepts technical and private wealth executive manager Graeme Colley said: “One of the advantages we see out of the change in the contribution rules is the possibility that people [who are spouses and members of the same SMSF] can even up their account.”
Colley used a case study to illustrate his point, referring to a situation where Louise and Benjamin are married, both age 68 in the 2023 financial year, and members of the same SMSF. In the example, Louise has a total super balance of $2 million, while Benjamin’s total super balance stands at $1 million. Further, the scenario sees both parties wanting to reduce the gap between each member’s balance.
“In this case the person with $2 million in super won’t be able to make non-concessional contributions to the fund simply because they’re over the $1.7 million cap, which comes in on 1 July 2021,” he noted.
“[But this member could] withdraw money [say $100,000] from the fund, give it to the other person [and have them make a contribution], or make a spouse contribution if they want to do it that way, and that would build up the other person’s balance and reduce their [own total super balance].
“Basically [it would allow them to start] evening things out and they may qualify for some of the other contribution concessions that are available.”''