The increase in the general transfer balance cap (TBC) from 1 July this year may open the door for super fund members to complete a three year non-concessional bring forward strategy if they were previously blocked from doing so by their total super balance (TSB).
Smarter SMSF education and technical manager Tim Miller noted while the TBC would be indexed from the start of the new financial year, and the contribution caps would remain the same, the interplay between the TBC, TSB and non-concessional contributions (NCC) cap was important to review.
“Looking backwards to 30 June 2024 we have a general TBC of $1.9 million which gives us various thresholds in relation to the TSB as to whether we can make a one year, two year or three year non-concessional bring forward contribution,” Miller said today during a SuperGuardian webinar.
“From a planning point of view looking forward we can add $100,000 to those thresholds and so the TSB limits [for a bring forward strategy] go up from less than $1.66 million to less than $1.76 million [for a $360,000 amount], $1.66 million to $1.76 million [for $240,000], and $1.78 million to $1.88 million [for $120,000].
“That provides us with some opportunities that come about due to the different timing of indexing the general TBC and indexing the contributions caps in this year if we’re in a situation where somebody who triggered an NCC bring forward in the preceding couple of years is locked in by the previous cap.
“These people did not get the indexation other people got on 1 July 2024 but with the further indexation of the general TBC they now may have the capacity to finalise or finish off what was triggered in a previous bring forward position.”
Miller gave the example of a member with a TSB of $1.67 million as at 30 June 2023 making a $150,000 bring forward NCC and who planned on contributing the remaining $180,000 in the 2025 financial year but was blocked from doing so when their TSB reached $1.9 million.
He pointed out with the increase of the general TBC to $2 million from 1 July, they would be able to complete the strategy as the amount contributed under it was only linked to whether their TSB was over or under the general TBC.
“This example highlights the difference of what happen when there is no indexing of the non-concessional contributions cap while we’re in a bring forward period but still being able to execute on the entirety of a bring forward strategy based on the general TBC indexing at 1 July.”
