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Total super balance

What is the total superannuation balance?

Section: 8.1

This commenced from 1 July 2017, the 'total superannuation balance' is a way to value a members super benefit on a given date.

In determining a members total superannuation balance is relevant for their eligibility for the following:

  • unused concessional contributions cap carry-forward - from 1 July 2019 if a member's total super balance is less than $500,000 at the end of 30 of the previous financial year they are able to increase their concessional contributions cap.
  • non-concessional contributions cap and the bring forward arrangement - from 1 July 2017 if on 30 June of the previous financial year the total super balance is below $1.6 million a member may be eligible for a non-concessional contributions cap above zero. A member may also be eligible to bring forward their non-concessional contributions cap of two or three times the annual non-concessional cap depending on their total super balance.
  • government co-contributions - a member may be eligible if they do not exceed their non-concessional contributions cap for the relevant year and their total super balance is less than general transfer balance cap ($1.6 m) that financial year.
  • the tax offset for spouse contributions - the spouse receiving the contributions cannot contribute more than their annual non-concessional contributions cap for the relevant year and the spouse must have a total super balance less than the general transfer balance cap ($1.6m) immediately before the start of the financial year in which the contributions was made.

The total superannuation balance is also relevant to SMSFs and complying superannuation funds with fewer than five members (small APRA funds) for determining their eligibility to use the segregated asset method to determine their exempt current pension income (ECPI) - SMSFs and small APRA funds will not be able use the segregated assets for an income year if:

  • at a time during the income year there is at least one superannuation interest in the fund that is in retirement phase
  • just before the start of the income year a member of the fund has a total superannuation balance that exceeds $1.6 million and they are a retirement phase recipient of a superannuation income stream. The member's total superannuation balance includes the member's superannuation interests in all funds. The superannuation income stream does not have to be from their SMSF/small APRA fund as it can be from another superannuation income stream provider, and
  • at a time during the income year this member has a superannuation interest (in accumulation or in retirement phase) in the fund.

The following example is an extract from the ATO website:

Example: Total super balance

Andy is 50 years old and earned $35,000 in 2018-19 and 2019-20.

Andy's employer made employer (before-tax) contributions to Andy's super fund of $3,500 per year.

Andy also made $10,000 in non-concessional (after-tax) contributions to super each financial year.

Andy received a structured settlement payment in June 2015 of $1,000,000 due to an accident at work Andy advised both funds and made a non-concessional contribution of $500,000 to each fund.

Andy has two accumulation super accounts with two different super funds. They have a balance of $700,000 each on 30 June 2020.

Andy does not have a transfer balance account.

On 30 June 2020 Andy's total super balance is $400,000: [$1,400,000 (total accumulation accounts) − $0 (transfer balance account) − $0 (rollovers) − $1,000,000 (structured settlement)].

On 30 June 2020, Andy's total super balance is $400,000, being:

  • the value of his accumulation accounts ($1.4 million), minus
  • his $1 million structured settlement contributions.

Andy is under 65 and his total super balance at the end of 30 June 2020 is less than $500,000. Therefore he:

  • has contributed $7,000 in concessional contributions since 1 July 2018 and has $43,000 available in catch up concessional contributions along with his annual $25,000 concessional contributions cap available to use in 2020-21
  • can make up to $300,000 in non-concessional contributions without exceeding his cap in 2020-21
  • has an income of $35,000 and will be entitled to a Government Co-contributions payment if he makes non-concessional contributions again in 2020-21 of any amount less than $300,000 and his total super balance remains below $1.6 million.

This technical resource is intended for the use of financial advisers only. It is current as at the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.

Last modified: Thursday, September 24, 2020