The Work Test

The ATO defines gainful employment as being employed or self-employed for gain and reward in any business, trade, profession, vocation, calling, occupation or employment.

That means working and getting paid for it.

This does not include voluntary work and rarely includes earning a passive income or ad hoc income of a domestic nature, such as being paid to house-sit for a friend.

You don’t need to receive the income directly to be classified as gainfully employed; you can choose to salary sacrifice part or all of it.

To meet the work test criteria, you must be able to prove that you were gainfully employed for 40 hours or more in a consecutive 30-day period within the financial year you’re claiming your tax concession. How you accrue the hours is up to you. For example, you could work 5 hours every Tuesday and Wednesday for four consecutive weeks, to meet the minimum hours – as long as those weeks are prior to 30 June.

As with regular voluntary contributions to your super prior to turning 67, contribution caps still apply to your payments. These are the maximum amounts you can voluntarily contribute in order to gain the tax concession. In 2024/25, they are:

• Before tax contributions cap: $30,000
• After tax contributions cap: $120,000

Being over 67 doesn’t disqualify you from the government super co-contribution or making a voluntary payment to your partner’s super through spouse contributions. If you want to take these actions, the first step is to pass the work test.

The work test exemption is an old rule applying to some 65- and 66-year-olds. In July 2020 the start age for the work test increased from 65 to 67. The work test no longer applies to any 65- and 66-year-olds so the work test exemption was cancelled.