An SMSF technical expert has dispelled a common misconception regarding the ability for an individual to make non-concessional contributions with regard to their total super balance.
Specifically, Accurium senior SMSF educator Anthony Cullen was making reference to situations where a person’s total super balance exceeds the general transfer balance cap, currently set at $1.9 million.
“If your total super balance is $1.9 million or above, technically the general transfer balance cap or above, then your non-concessional [contributions] cap is nil,” Cullen told attendees of a technical webinar he hosted today.
“[In this situation] a lot of people still say, and I get caught out by this myself, [to] clients is if their total super balance exceeds the general transfer balance cap, they cannot make non-concessional contributions. Now strictly speaking that’s not true.
“Just because your total super balance is above the general transfer balance cap, that doesn’t prohibit you from making non-concessional contributions. It just means if you do make a [non-concessional] contribution, it will exceed your cap and you will get an excess determination and you’ve got to follow that process.”
He pointed out the distinction is significant to prevent SMSF members from making missteps when dealing with the excess amount.
To this end, he recognised the misconception led members to believe they were not allowed to make a non-concessional contribution because their total super balance was over the general transfer balance cap and therefore the money in question could simply be exited from the SMSF.
“If your [non-concessional] contributions cap is zero, that does not necessarily mean that you can make [these types of] contributions, you just have to deal with the [subsequent] consequences,” he reiterated.
Cullen also took the opportunity to confirm the Consumer Price Index figures released today mean a further round of indexation will be applied to the general transfer balance cap, which will take it to $2 million, effective 1 July 2025. Late last year the industry had acknowledged this would more than likely be the case.
