Careful planning needs to be thought about to ensure members do not exceed their contribution caps. Some clients who have lodged their 2018 tax returns have unintentionally exceeded their contribution caps.
Contribution changes from the 1st of July 2017.
Understanding the Total Superannuation Balance Calculation.
Many of the changes to super (including concessional catch-up provisions, non -concessional caps, and the ability to segregate assets in the pension phase) hinge on the members Total Superannuation Balance (TSB)
. Advisors will need to ask a lot more questions of clients to ensure they know the members TSB.
Be careful to check the TSB as at 30 June the year prior making a Non-Concessional Contribution, as not all members will be entitled to the $300,000 bring-forward availability. In the table below, you can see the amounts that can be brought forward.
|Total Super Balance on
30 June prior
||Non Concessional Contribution
cap for the first year
||Bring forward period
|Less than $1.4m
|$1.4m to less than $1.5m
|$1.5m to less than $1.6m
||No bring forward available
|$1.6m or more
Examples of how clients can make mistakes:-
- Clients who already have salary sacrificing arrangements in place need to adjust their payments to make sure they do not exceed the contribution caps before the end of a financial year.
- Possible confusion by clients utilizing the contribution bring forward rule eg $540,000 contributed in 2017 being the three year period over and done with and then contributing $300,000 in 2018, with all the changes that recently occurred.
- All eligible members now have the ability to make tax deductible contributions. A great opportunity for those wanting to increase their retirement nest egg.
- Be careful for members over 65 years of age, the work test still applies.