Setting Up or Joining an SMSF After Preservation Age

Setting up an SMSF after preservation age can be a smart financial strategy for those who continue working and earning. Many assume that superannuation becomes less relevant after preservation age, but that’s not always the case. Even at 70, it is possible to start a new self-managed super fund (SMSF) or become a member of an existing one, as long as the fund meets the usual compliance requirements.

Making Contributions After 65

Superannuation rules allow people over 65 to continue making contributions under certain conditions. Here’s how it works:

1. Concessional (Pre-Tax) Contributions

If an individual has very little super (under $500,000), they can use the carry-forward rule. This allows them to contribute any unused concessional contributions from the last five years, provided they meet the work test (more on that below).
The current concessional contributions cap is $27,500 per year. However, if there are unused cap amounts from the past five years, significantly higher contributions may be possible while still claiming a tax deduction.

2. Non-Concessional (After-Tax) Contributions

Even without the work test, non-concessional contributions of up to $120,000 per year can be made until age 75.
If a larger contribution is desired, the bring-forward rule can be triggered, allowing up to $360,000 in one go, depending on the total super balance.

3. The Work Test

For concessional contributions, those over 67 must meet the work test. This means working at least 40 hours in any 30-day period during the financial year in which the contribution is made. This requirement can often be easily satisfied by those still involved in business operations.

Why Continue Contributing to Super?

Even after preservation age, superannuation offers valuable tax advantages:

✅ Lower Tax on Earnings – Super funds pay a maximum of 15% tax on earnings, usually lower than personal tax rates.
✅ Tax Deductions – Concessional contributions reduce taxable income, helping to lower the overall tax bill.
✅ Tax-Free Withdrawals After 60 – Once inside super, funds can be withdrawn tax-free if used within a pension account.

📌 According to the ATO’s official SMSF guidelines, members must ensure their fund complies with contribution limits, investment restrictions, and tax rules.

A Smart Strategy for Business Owners

For those still running a business, contributing to super can be a tax-effective way to move profits into retirement savings. SMSFs can also be used to invest in:

📌 Shares and managed funds
📌 Commercial property, including business premises (if structured correctly under SMSF rules)

With the right structure, business owners can build wealth within super while maintaining compliance.

FAQs About SMSFs After 65

1. Can I start an SMSF after 65?

Yes, there is no age restriction on starting an SMSF. However, the ability to make contributions depends on compliance with superannuation rules, including the work test for those over 67.

2. Do I need to meet the work test to contribute to my SMSF after 67?

Yes, individuals over 67 must meet the work test to make concessional contributions. This means working at least 40 hours within a 30-day period in the financial year of the contribution.

3. What happens to my SMSF when I reach 75?

Once a member turns 75, they generally cannot make voluntary super contributions, except for mandated employer contributions (such as the Super Guarantee).

4. Can my SMSF own business property?

Yes, SMSFs can invest in business property, provided the investment complies with SMSF regulations. Business premises owned by an SMSF must be leased at market rates and follow arm’s length transaction rules.

5. How does an SMSF remain compliant after preservation age?

Trustees must ensure that the SMSF:

Adheres to contribution limits
Meets minimum pension withdrawal requirements
Maintains correct asset valuations for reporting

SIS Logic specialises in SMSF administration and auditing to assist with compliance.

Final Thoughts

Setting up or joining an SMSF after preservation age remains a viable and tax-effective option for those who continue working and earning. Ensuring the fund meets compliance requirements is essential to maintaining its benefits. At SIS Logic, we provide SMSF administration and auditing services to help trustees meet their regulatory obligations.

📞 Contact SIS Logic today for expert SMSF administration and compliance support.