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The many ages of superannuation

Feb 8, 2022, 09:25 AM
By Philip La Greca
Executive Manager, SMSF Technical and Strategic Services

When people think about the impact of aging on superannuation, the focus has generally been on retirement - questions like, “When can I access my money and what can I do?”

Turning 65 is a pivotal moment with regards to retirement, however, there are significant superannuation rules that apply throughout your lifetime.

So, what does each birthday bring for SMSF trustees? 

Under 18

Whilst you cannot be a trustee of an SMSF, you can be a member if a parent or guardian acts as a trustee on your behalf. 

Contribution restrictions also apply pertaining to your ability to make personal concessional contributions. You can only make personal concessional contributions if you have income derived from work activities. If you do not, the only concessional contributions you can receive will be from a legitimate employer.

As a minor, you are entitled to receive a death benefit pension from the superannuation of either of your parents and be treated like a dependant for tax purposes on any superannuation lump sum death benefit.

When you turn 18 

If you're in an SMSF, you now must be appointed as a trustee in your own right. This means that you take on all the legal responsibilities of being a trustee of an SMSF.

You can also make personal concessional contributions, irrespective of your work status, providing you have enough taxable income to claim the deduction.

You no longer automatically meet the tax definition of dependant for death benefit purposes and, as such, any death benefit you might receive cannot necessarily be in the form of a pension and could pay lump-sum tax.

Age 25

This is another trigger that relates to the tax definition of dependant. If you are a full-time student or a child who is financially dependent on your parents up to this age, you may receive their superannuation death benefit tax-free.

Most child death benefit pensions also need to cease, with the balance paid out as a lump sum death benefit. 

Age 55

This is the earliest preservation age available if you were born before 1 July 1960. After attaining preservation age, it is possible to meet one of two retirement definitions that may allow you access to your superannuation benefits. The way in which a benefit is taxed will depend on whether you take the benefit as a lump sum or an income stream.

It is possible to make small business CGT concessional contributions. These amounts enable business owners to take the proceeds, or part of, from the sale of their enterprise and put it into superannuation to fund their retirement. The two methods that are available are a) the small business CGT retirement exemption, which is capped at $500,000, and b) the 15-year CGT proceeds exemption.

Preservation age (55 to 60)

Due to the changes in rules over the years since superannuation was established, your preservation age depends on when you were born. After attaining preservation age, it is possible to meet one of two retirement definitions that may allow you access to your superannuation benefits. The way in which a benefit is taxed will depend on whether you take the benefit as a lump sum or an income stream.


Age 60 and above

Superannuation benefits, whether a lump sum or a pension stream, are non-assessable non-exempt income. Most superannuation benefits are not subject to any tax and are not included your personal income tax return. It is possible to declare retirement under a different definition. This means that after this age, if you partially cease employment arrangements but not all, you can access your superannuation.

Age 65

You automatically satisfy the condition of release and can now access your superannuation, via a lump sum or pension, irrespective of whether or not you are still working. Historically 65 was the pension age.

This is also the age when downsizer contributions can become an option for disposing of a principal residence.

Age 67

There are additional rules that apply for people who wish to make certain types of contributions to superannuation. Specifically, you will need to pass a work test (40 hours in a 30-day consecutive period). This restriction does not apply to certain types of contributions, such as Superannuation Guarantee and downsizer contributions.

Currently, you cannot the bring-forward rule for non-concessional contributions.

Age 75

The only types of contributions that are acceptable are those that are made in accordance with the Super Guarantee by your employer or in accordance with an industrial award. There is small leeway period, 28 days after the month in which you turn 75, to make final contributions. Beyond this date, no personal contributions can be made.

As you can see, there are significantly different opportunities and hurdles to consider as you age, and your superannuation matures with you.


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