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  • Total superannuation balance

    Your total superannuation balance at a particular time is calculated by:

    • adding together           
      • the accumulation phase value of your super interests that are not in the retirement phase. This is the total amount of benefits that would become payable if you voluntarily ceased the interest at that time
      • the retirement phase value of your super interests. This is the balance of your transfer balance account, modified to reflect the value of account-based interests in the retirement phase at that time and disregarding certain debits
      • the amount of each roll-over super benefit not already reflected in the accumulation phase value or the retirement phase value (that is, rollovers in transit between super funds on 30 June).
    • subtracting any personal injury or structured settlement contributions that have been paid into your super funds.

    Accumulation phase value

    Your accumulation phase value (APV) is the total amount of super benefits that would be payable if you had voluntarily ceased a super interest at the time of calculation. Generally, this is the withdrawal value for an accumulation fund.

    Alternatively, the superannuation regulations may specify a different method for determining the accumulation phase value if you have a defined benefit interest and you are not in retirement phase.

    The accumulation phase value also includes:

    • certain deferred super income streams
    • transition-to-retirement income streams that are not in the retirement phase
    • super income streams that have not complied with the pension or annuity standards or a commutation authority.

    Self-managed super funds (SMSFs) need to provide an APV on a transfer balance account report (TBAR) for the 2016-17 financial year in certain circumstances. For example, if the SMSF member has 100% of their interest in the accumulation phase at 30 June 2017, then providing the APV is only required when the difference between the APV and the closing account balance of the SMSF member’s accumulation phase assets is not limited to the value of exit fees, administration fees and realisation costs. The difference will be the amount of the APV to be reported.

    If not provided, the member's APV will be calculated as the difference between the closing account balance from the SMSF annual return and the value of the member's transfer balance account for the SMSF at 1 July 2017.

    Retirement phase value

    Your retirement phase value is worked out using your transfer balance account at the end of 30 June, with modifications if you either:

    • have a certain account-based super income stream or streams
    • have made structured settlement contributions to your super fund.

    For account-based super income streams, the debits and credits in the transfer balance account are disregarded. Instead, your modified transfer balance includes the current value of the super interest that supports the account-based super income stream at the end of 30 June of the relevant financial year. The current value is the amount that would become payable if you were to voluntarily cease the interest.

    If you only have account-based income streams, generally your retirement phase value will simply reflect the current value of those income streams.

    All other super income streams keep the transfer balance account value, with modifications still required if you have made a structured settlement contribution to your super fund. In addition, certain transfer balance items are still taken into account (such as credits for excess transfer balance earnings and debits for non-commutable excess amounts).

    Total superannuation balance transitional period

    There are transitional provisions for working out your retirement phase value of your total superannuation balance at the end of 30 June 2017 because a transfer balance account does not commence until 1 July 2017. The transitional arrangements apply so that your transitional transfer balance at the end of 30 June 2017 is equal to:

    • the sum of your transfer balance credits just after the start of 1 July 2017, less
    • any debits in relation to payment splits (if applicable).

    This is subject to the transfer balance modifications for account-based income streams.

    What's affected by your total superannuation balance

    Total superannuation balance is relevant when working out eligibility for:

    • carry forward concessional contributions – from 1 July 2019 if your total superannuation balance is less than $500,000 at the end of 30 June of the previous financial year you may be able to increase your concessional contributions cap. To do so you must have unused concessional contributions cap space for one or more of the previous five year, starting from 2018–19. The first time you will be required to know your total superannuation balance for the concessional contributions cap carry forward measure will be the 30 June 2019.
    • non-concessional contributions cap and the bring forward of your non-concessional contributions cap – from 1 July 2017 if on 30 June of the previous financial year your total superannuation balance is below $1.6 million you may be eligible for a non-concessional contributions cap above zero. You may also be eligible to bring forward your non-concessional contributions cap of two or three times the annual non-concessional cap depending on your total superannuation balance.
    • government co-contribution – from 1 July 2017 in addition to the existing eligibility requirements, you will be eligible for the government co-contribution in a financial year if            
      • your non-concessional contributions do not exceed your non-concessional contributions cap for the relevant financial year
      • on 30 June of the previous financial year, your total superannuation balance is less than the general transfer balance cap ($1.6 million for 2017–18) that financial year
    • spouse tax offset – from 2017–18, there are additional eligibility requirements to meet to be entitled to the tax offset:           
    • segregated asset method – from 2017–18, SMSFs and regulated super funds with fewer than five members (small-APRA funds), will not be able to use the segregated asset method to calculate exempt current pension income if at any time in the year, the fund has a retirement phase interest, and all of the following apply            
      • a person has a total superannuation balance exceeding $1.6 million just before the start of that year
      • the same person has a super interest in the fund at any time during the year
      • the same person is the retirement phase recipient of a superannuation income stream just before the start of the year (from the fund or another provider).

    Example: total superannuation balance

    Andy is 50 years old and earned $35,000 in 2018–19 and 2019–20.

    Andy’s employer made employer (before-tax) contributions to Andy’s Superannuation Fund of $3,500 per year.

    Andy also made $10,000 in non-concessional (after-tax) contributions to super each financial year.

    Andy received a structured settlement payment in June 2015 of $1,000,000 due to an accident at work Andy advised both funds and made a non-concessional contribution of $500,000 to each fund.

    Andy has two accumulation super accounts with two different super funds. They have a balance of $700,000 each on 30 June 2020.

    Andy does not have a transfer balance account.

    On 30 June 2020 Andy’s total superannuation balance is $400,000: [$1,400,000 (total accumulation accounts) − $0 (transfer balance account) − $0 (rollovers) − $1,000,000 (structured settlement)]

    On 30 June 2020, Andy’s total superannuation balance is $400,000, being:

    • the value of his accumulation accounts ($1.4 million), minus
    • his $1 million structured settlement contributions.

    Andy is under 65 and his total superannuation balance at the end of 30 June 2020 is less than $500,000. Therefore he:

    • has contributed $7,000 in concessional contributions since 1 July 2018 and has $43,000 available in catch up concessional contributions along with his annual $25,000 concessional contributions cap available to use in 2020–21.
    • can make up to $300,000 in non-concessional contributions without exceeding his cap in 2020–21.
    • has an income of $35,000 and will be entitled to a Government Co-contributions payment if he makes non-concessional contributions again in 2020–21 of any amount less than $300,000 and his total superannuation balance remains below $1.6 million.
    End of example

    The difference between $1.6 million transfer balance cap and $1.6 million total superannuation balance

    The transfer balance cap introduces a new limit on the amount you can transfer and hold in retirement phase to support an income stream over the course of your lifetime. You will be liable to pay excess transfer balance tax if your transfer balance account exceeds the cap limit.

    The total superannuation balance has been introduced as a way to value your super interests on a given date to determine your eligibility for various super measures.

    The general transfer balance cap will be set at $1.6 million for 2017–18. This means that you will need to comply with two separate $1.6 million limits from 1 July 2017:

    • the transfer balance cap limit on the value of the interests that support your retirement phase income streams
    • your total superannuation balance in order to determine your            
      • non-concessional contributions cap
      • non-concessional contributions bring forward arrangement
      • carry forward concessional contributions
      • government co-contribution eligibility.

    The general transfer balance cap is subject to indexation in $100,000 increments on an annual basis in line with the consumer price index. The total superannuation balance limit is equal to the general transfer balance cap.

    Value of transfer balance account and total superannuation balance

    Your transfer balance account and total superannuation balance are calculated differently, so after 2017–18 it is possible that you will have different balances under the two separate tests.

    Your transfer balance account is calculated on amounts that you transfer into retirement phase to support a pension or annuity over the course of your lifetime.

    The transfer balance account works in a similar way to a bank account. Amounts you transfer to, or are otherwise entitled to receive, from the retirement phase give rise to a credit (increase) in you transfer balance account.

    Certain transfers out of the retirement phase give rise to a debit (decrease) in your transfer balance account. The total value of all of the credits and debits to your transfer balance account at the end of a financial year, will count towards the calculation of your total superannuation balance, with modifications for account-based income streams and payment splits.

    Example: transfer balance account and total superannuation balance

    As of 1 April 2017, Fred is receiving an account-based pension valued at $2 million. On 28 June 2017, Fred commutes $500,000 from his pension and transfers it back into his super accumulation account.

    On 18 August 2017, Fred makes $50,000 in voluntary non-concessional contributions to his fund.

    Fred has a personal transfer balance cap of $1.6 million for 2017–18. Fred has a transfer balance account of $1.5 million, so is within his personal transfer balance cap.

    Fred’s total superannuation balance as of 30 June 2017 was $2 million ($500,000 in the accumulation phase of his super fund and $1.5 million in his transfer balance account). As this exceeds the general transfer balance cap, his $50,000 contribution will be treated as excess non-concessional contributions.

    End of example

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      Last modified: 29 Oct 2018QC 19749