Tax-deductible super contribution and the work test
Question:
I read everywhere that you can make a tax-deductible super contribution of up to $27,500 before you are 67 without meeting the work test. I turn 67 in mid-June and intended to make a contribution while I am 66.
However, I've just read a random website that suggests I must meet the work test if I want to claim a deduction for the financial year in which I turn 67.
The ATO website info on this issue does not clarify the position. Do you know?
Answer:
John Perri of AMP Technical tells me it all comes down to when the contribution is made. If it is made before turning age 67 in a financial year, then the work test DOES NOT have to be met in order to claim the tax deduction.
However, if the contribution is made after the person turns 67 in a financial year, then the tax deduction can only be claimed if the work test is then met. The law is clear on this.
Retirement home purchase and the aged pension
Question:
Is the value of the purchase of a retirement home exempt from the asset test as applied to the age pension and does an exemption apply to the various models eg. freehold, leasehold, loan or licence?
Answer:
Yes. In some circumstances you can be treated as a non-homeowner and be eligible for rent assistance where the purchase price is under $242,000.
If you ask the Village for a Village Guru Report it will clearly show you what the village costs are ingoing, ongoing and outgoing and provide you with an estimate of any age pension and rent assistance entitlements.
- Noel Whittaker is the author of Retirement Made Simple and numerous other books on personal finance. Email your questions to edit@thesenior.com.au
- This advice is general in nature and readers should seek their own professional advice before making any financial decisions.