Total Superannuation Balance - its impact on contributions

If a member’s total superannuation balance immediately before the start of a financial year (or in the case of 2017/18 financial year, immediately at the start of that year) is equal to or greater than $1.6m, then no ordinary non-concessional contributions can be made.  Importantly, concessional contributions, personal injury contributions and CGT non-concessional contributions can still be made.

If the member’s total superannuation balance immediately before the start of a financial year (or for 2017/18 immediately at the start of that year) is less than $1.6m then ordinary non-concessional contributions can be made.  In particular, the amount of the ordinary non-concessional contributions which can be made is not limited to the shortfall between $1.6m and your total superannuation balance.  Concessional contributions, personal injury contributions and CGT non-concessional contributions can also be made.

Example 1

Bill is aged 61 and has a total superannuation balance as at 30 June 2018 of $1,580,000.  He has previously made $600,000 of CGT non-concessional contributions.  For the 2018/19 financial year, Bill can contribute up to $100,000 as ordinary non-concessional contributions.  Bill is not limited to making just $20,000 of ordinary non-concessional contributions (being the shortfall between his total superannuation balance and $1.6m).  Additionally, Bill could in respect of the same financial year contribute up to $815,000 in CGT non-concessional contributions (which is the unused portion of his lifetime cap).  The fact that the total non-concessional contributions made during 2018/19 are $915,000 is not relevant.  The only relevant issue is the value of Bill’s total superannuation balance immediately before the start of the financial year. 

(Note in this example, the dollar value of the GCT non-concessional contributions cap for 2016/17 has been issued as the value for 2018/19 has not, as yet, been released.  Also, the SIS contribution acceptance rules must still be satisfied eg if aged over 65 then the age test must be satisfied) to make contributions.)

If your total superannuation balance equals or exceeds $1.6m before the start of a financial year thereby preventing you from making ordinary non-concessional contributions in respect of that financial year, this will not preclude you from making concessional contributions or CGT non-concessional contributions in respect of that financial year.

Should your total superannuation balance subsequently fall below $1.6m in relation to a financial year (say, because of negative investment earnings or because of pension commutations) then you can still make ordinary non-concessional contributions in respect of that financial year.

Example 2

Mary is aged 66 and her total superannuation balance in respect of 2018/19 is $1,601,000.  Consequently, she is precluded from making any ordinary non-concessional contributions in relation to 2018/19.

In respect of the next financial year 2019/20 (when Mary is now aged 67 and still working), Mary’s total superannuation balance is $1,590,000 as Mary has withdrawn $30,000 from her superannuation account.  As the total superannuation balance is less than $1.6m, Mary is now permitted to contribute up to $100,000 in ordinary non-concessional contributions in respect of 2019/20.