The size of an SMSF member’s total super balance (TSB) should be the first factor in considering whether they can employ any contribution strategies followed by any consideration of their relationship or martial status, according to a technical specialist.
Smarter SMSF education and technical manager Tim Miller said the TSB was the determining factor when considering non-concessional contributions and bring-forward rules as well as government co-contributions, spouse contributions and carrying forward unused concessional contributions.
“When we are talking about contribution strategies to clients we can tailor what we’re talking about based on having an appreciation for that individual’s TSB,” Miller said during a webinar hosted by SuperGuardian.
“Knowing what their balance is at the previous 30 June is critical to be able to say ‘let’s consider using the unused concessional carry forward strategy because you have a TSB less than $500,000’.
“For someone who has more than $1.9 million at the moment we can say ‘you can’t make non concessional contributions because your cap is zero and if you do make a contribution it’s going to result in a problem for you’.”
Miller added that in conjunction with the TSB he also considers their personal circumstances of the individual to ascertain which strategies may still be relevant to them.
“With the TSB we are looking at the super fund position, and what is the balance of the individual as well as their age, but what is the makeup of their family because certain contribution strategies are worth contemplating for different circumstances and family dynamics,” he said.
“You take the situation of somebody who is single with no dependents and we are taking off the table anything to do with spouse contributions or splitting as well as recontributions for a spouse.
“In looking at a nuclear family all the strategies are potentially available. So the whole concept of rebalancing and child contributions are there if there is a happy family and the children join up and become members of the fund themselves.
“Compared that to a blended family, where such things as contribution splitting, spouse contributions and spouse recontributions may not be as appropriate because we’re looking at superannuation as an estate planning vehicle.”
