Total super balance and contributions

What’s important about my total superannuation balance?

It’s nearly the end of the financial year and you’ll need to do some planning for next financial year if you’re thinking of making non-concessional super contributions or working out whether you will qualify for the co-contribution or spouse contribution tax offset.

Qualifying for those types of concessions for next financial year depends wholly on your total super balance as at 30 June this year. So get your thinking caps on as small changes before 30 June can make a big difference to your contributions next financial year.

What is your Total Super Balance and how is it calculated?

Your total super balance is the total amount you have in all superannuation funds as at 30 June in the previous financial year. It is calculated as all the amounts you have in accumulation phase and pension phase. If your total super balance is greater than $1.6 million you cannot make non-concessional contributions to super, will not qualify for the co-contribution or your partner will not receive the spouse contribution tax offset.

Your Total Super Balance and making non-concessional contributions

Non-concessional contributions are personal contributions that you or your spouse makes for you to super and no tax deduction has been claimed. The standard non-concessional contribution is $100,000 but if you are under 65. But it is possible to use the ‘bring forward rule’ and make non-concessional contributions of up to $300,000 at any time over a fixed 3-year period if the contribution is greater than standard amount in the first year of the 3 years. Once your total super balance reaches $1.6 million a tax penalty will apply if non-concessional contributions are made and you may be required to withdraw them from super. Also, if your total super balance is at least $1.4 million access to the bring forward rule is limited.

Qualifying for co-contributions?

The government co-contribution is a payment to your superannuation fund of up to $500 if you make non-concessional contributions to super and you have an adjusted income of no more than $37,697 in the 2018-19 financial year or $38,564 in the 2019-20 financial year. You can qualify for a reduced co-contribution if your income is no more than $52,697 for the 2018-19 financial year or $53,564 for the 2019-20 financial year. But there’s a catch, if the amount you had in super on 30 June in the previous financial year was at least $1.6 million you will not receive any co-contribution from the government. This means that depending on your total super balance you may receive a co-contribution in some years and in others you may not.

Qualifying for the spouse contribution tax offset?

If your partner makes non-concessional contributions to super for you, they may be eligible for a low-income spouse tax offset of up to $540. The maximum tax offset applies if your income is no more than $37,000 and an 18% tax offset applies to the first $3,000 of non-concessional contributions made for you. If you earn between $37,000 and $40,000 the maximum tax offset reduces. But there’s also a catch because if your total super balance in more than the $1.6 million threshold your spouse will not be eligible for any low-income spouse tax offset.

Access to bring forward super contributions

Any tax-deductible contributions made to super by you or someone else are capped in total to $25,000. Since 1 July 2018 you can carry forward the difference between the amount of tax-deductible contributions made for you in a year and the cap. For example, if you have claimed a tax deduction for super contributions of $10,000 in the 2018-19 financial year you can carry forward $15,000 ($25,000 - $10,000) and claim a tax deduction for up to 5 years. But once your total super balance is at least $500,000 you won’t be eligible to claim the carry forward amount. This means that a bit of careful planning may reap benefits if you wish to use the carry forward contribution to its maximum.

Why plan your super contributions now for next year?

Your total super balance creates a limit on whether you are eligible for super concessions. It impacts on making non-concessional contributions, accessing the bring forward rule, co-contributions and claiming carry forward concessional contributions. It may also prevent your spouse getting access to the low-income tax offset. So plan now if you are going to make super contributions next year.