The ATO proposes to modify the operation of S.290-165(1A) of the ITAA 1997, so that a person can satisfy the 'work test' for superannuation purposes if they are an employee under the expanded meaning of that term in S.15A of the SIS Act and satisfy the other relevant criteria.
Before 1 July 2022, the work test in the SIS Regulations allowed a superannuation fund to accept personal superannuation contributions in respect of persons aged 67 to 75 if they are 'gainfully employed' (i.e., “employed or self-employed for gain or reward in any business, trade, profession, vocation, calling, occupation or employment”) in a relevant period.
For contributions made on or after 1 July 2022, the work test was relocated to S.290-165(1A) of the ITAA 1997, which also requires those aged 67 to 75 to have been 'gainfully employed' for a relevant period if they want to claim a deduction for personal superannuation contributions.
The SIS Act contains an expanded definition of 'employee' to cover certain employees who may not be common law employees, such as constitutional or statutory office holders, company directors, members of the Australian Defence Force and parliamentarians.
There is however no definition of 'employee' in the ITAA 1997, and so that term takes its ordinary common law meaning. Therefore, there may be some people who were previously able to claim deductions (because they fell within the expanded definition of 'employee' in the SIS Act) but who are not 'gainfully employed' for the purposes of the ITAA 1997 because they are not common law employees or self-employed.
The Draft Taxation Administration (Remedial Power — Work Test for Personal Superannuation Contributions) Determination 2023 seeks to resolve the above issue. Pursuant to the instrument, all individuals aged 67 to 75 who are employees under the SIS Act and who would have been eligible to claim a deduction for their personal superannuation contributions if the 'work test' had not been relocated in 2022 from the SIS Act to the ITAA 1997, are still eligible to do so. In this way, the previous eligibility criteria for deducting personal superannuation contributions continue to apply.
Once it has been finalised, the instrument will apply to personal superannuation contributions made on or after 1 July 2022.
Ref: ATO website Legal database, LI 2023/D11 - Explanatory statement, 19 April 2023