Among the superannuation reforms that many SMSF members are still coming to terms with is the introduction of a concept of “total superannuation balance”.
On the surface, an individual may simply think that it is the sum of balances of their superannuation interests. However, this is not the case.
Commissioner’s guidance on this matter includes a law companion ruling LCR 2016/12. In Tax & Super Australia’s submission on the draft of this guideline, it called for inclusion of more complex examples, consideration of non-commutable superannuation income streams and further clarification on the treatment of structured settlements.
What is “total superannuation balance” relevant for?
The total superannuation balance is relevant in determining taxpayer’s eligibility for:
- making non-concessional contributions according to the non-concessional contributions cap
- government co-contribution
- tax offset for spouse contributions
- using the segregated assets method to determine exempt current pension income (ECPI)
- unused concessional contributions cap carry forward (this measure comes into effect from 1 July 2018).
Broadly, the first three of the above will not be available to an individual if his or her total superannuation balance is greater than the general transfer balance cap, set at $1.6 million for 2017-18 financial year and indexed in $100,000 increments in line with the CPI. The unused concessional contributions cap carry forward is going to be tested against the $500,000 total superannuation balance.
Superannuation quarterly update webinar
The impact of a fund’s total superannuation balance on the ability to make non-concessional contributions to super, including triggering the bring forward provisions for non-concessional contributions, is to be covered in depth in the next superannuation quarterly update, due to be held on Thursday March 22 (more details below).
Also to be examined are the transitional CGT relief provisions, as well as the frequency of SMSF transfer balance cap event-based reporting, including tips for completing the new transfer balance account report (TBAR).
The webinar is to be presented by Gabriela Rusu, who will as always take a practical look at all the issues, and provide practical case studies and worked examples. She will also be covering:
- the draft legislation for reversionary transition-to-retirement income streams (TRISs), which will allow the automatic transfer of a reversionary TRIS to eligible dependants upon the death of the primary recipient in the same way it does for account-based pensions. Currently, a TRIS cannot transfer to an eligible dependant (such as a spouse) upon the member’s death if the dependant has not satisfied a condition of release with nil cashing restrictions. If legislated, this measure will fix the current administrative difficulties surrounding TRISs.
- other legislative updates (including the draft regulation supporting the transfer of responsibility for early release of superannuation to the ATO).
- the latest hot issues brought by the ATO to the attention of SMSF trustees and professionals.
Superannuation quarterly update: Session 1.
22 March 2018. 11am to 12pm. Members $90. Non-members $110.
Details, and to make a booking, here.
Key issues for SMSFs still in need of clarification Key issues for SMSFs still in need of clarification Key issues for SMSFs still in need of clarification Key issues for SMSFs still in need of clarification