Day added that when thinking about contributions, many advisers and SMSF members may automatically think of non-concessional contributions, but he said this may not always be the case.

“We're dealing with people with balances up and around $3 million and remember the non-concessional contribution cap for a person with a total super balance over $2 million from 1 July this year will be nil, so we're not looking at non-concessional contributions for these people,” he said.

“We're looking at things like downsizer contributions, concessional contributions, small business CGT contributions, and therefore we need to adjust for all of those things.”

He continued that it is also important to think about death benefits and insurance.

“If a member's spouse passes away and their death benefit reverts to the survivor, then that reverted pension will start counting towards the survivor’s total superannuation balance,” he said.

“That death benefit pension will be treated as a contribution for Division 296 purposes, and the total super balance value of that pension will be stripped back out of the calculation.”

In relation to insurance proceeds, Day said if a client suffers an incapacity, and has a superannuation total permanent disability insurance policy sitting inside their fund that triggers a payout it will also increase the TSB and look like earnings.

“These rules will treat those insurance proceeds as a contribution. Other amounts such as reserve allocations that count towards the concessional cap will also be treated as a concessional contribution,” he said.

“We expect that this part of the bill will be updated and it’s important to note that it's only reserve allocations that count towards the concessional cap. If you have a reserve allocation that doesn't count towards the concession or non-concessional cap, in that situation, those amounts won't be treated as contributions and will not be deducted back out.”

He added that a reserve allocation could look like earnings and be subject to taxation spousal transfers.

“If I'm doing spouse contribution splitting, or if I've got a client that's gone through a family law issue or separation and they're splitting part of their superannuation benefits off to their ex-spouse, those amounts will be treated as contributions,” he said.

“Where this becomes very important is where you have clients with legacy pensions who may have decided they are going to commute that complying lifetime pension under these new rules. All those monies that fall into the reserve under these new rules will be allowed to be allocated back to the member that was receiving that original income stream, and won't count towards any caps.

“The problem is, if that is done after the 1 July this year, and if these rules aren't deferred, it will look like earnings as that's a reserve amount that doesn't count towards any cap and will be captured in the meaning of a contribution, and therefore included in earnings.”