TSB trap flagged with super fund expenses

“Previously, it was widely accepted that meeting a fund expense could be treated as a contribution,” explained Mr Miller.

“This is still the case but now the capacity to do so will be linked to a member’s total superannuation balance.”

Mr Miller reminded SMSF practitioners and trustees that the total superannuation dictates an individual’s ability to utilise the non-concessional contribution cap.

“The rules require an assessment of a member’s total superannuation balance at the preceding 30 June,” he said.

If the total superannuation balance is greater than $1.6 million, he said, then the member will not be able to make non-concessional contributions.

Mr Miller said SMSF trustees should also be careful with some of the traps relating to the transitional bring-forward rules and total superannuation balance.

“The bring-forward is triggered in the first year that a contribution exceeds the standard cap and is fixed for the following two financial years. Clients may have triggered the bring-forward prior to 30 June 2017 but not fully capitalised on the limit,” he explained.

“For those clients that did trigger pre-1 July 2017, their capacity to contribute is based on how much they originally contributed and what their total superannuation balance is.”

Where the cap was triggered in the 2015-16 year, the full three-year limit is $460,000, and where it was triggered in the 2016-17 financial year, the full three-year limit will be $380,000, he explained.

“As an example, a 60-year-old client who contributed $400,000 during the 2016-17 year is unable to contribute further non-concessional contributions until the 2019-20 financial year. Then of course any further contributions will be linked to their total superannuation balance,” he said.

“Whilst any individual who contributed in the 2015-16 year is now outside the transitional rules, it’s important to recognise whether the bring-forward rules were applied as there could be a contribution made post 1 July 2017 that is linked to the transitional rules. For example, if a client contributed $250,000 in 2015-16 and a further $210,000 in 2017-18 then their bring-forward resets from 1 July 2018.”