Generally, a person over the age of 67 (until 1 July 2020 the cut-off was 65) must satisfy the “work test” before they can make personal contributions to a super fund. To satisfy the work test, a person must have been gainfully employed for at least 40 hours in a period of 30 consecutive days in the financial year in which the contribution is made. The ability to make personal contributions into a super fund ceases at age 75.
Does the receipt of JobKeeper by a super fund member constitute gainful employment, even if the member has been fully stood down by their employer and is not actually performing work?
The Australian Prudential Regulatory Authority, which is the prudential regulator of most super funds other than SMSFs, has recently answered in the affirmative. In an update to its FAQ for COVID-19s, APRA says “In APRA’s view, it is appropriate for an RSE licensee [trustees of corporate, public offer and industry super funds] to take this approach because the individual is still employed and is obtaining a valuable benefit from his or her employer”. APRA stated it might be difficult for RSE licensees to differentiate between an individual member who is actually working and a member who is not working but still receiving the JobKeeper payment.
In some ways, this is a pragmatic response by APRA, but still very welcome. The ATO, which is the regulator of SMSFs, usually follows APRA’s lead on issues like this, so we would expect the ATO to announce shortly that this approach will also apply to SMSFs.
If you have any questions about the effect of JobKepper in relation to superannuation please contact your Nexia Adviser.