Superannuation Strategies

Superannuation Strategies for Investors with High Balances

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Australians who consider making super contributions starting July 2017 should know that the annual concessional before-tax contributions cap will be a lot lower than previous years, dropping to $25,000 for all from $30,000 for people under 50, and $35,000 for those over 50. 

The new concessional cap will be for all ages but those who have less than $500,000 in super will be allowed catch-up concessional contributions. The 2019/2020 year is the first financial year when people can roll over unused cap amounts from previous years to up to five years.

The current allowable non-concessional contribution is $180,000 per annum with a three-year bring forward rule. However, starting 1 July, it will be reduced to $100,000 per year with the ability to bring forward three years.

Total superannuation balance on 30 June 2017

Maximum non-concessional contributions cap for the first year

Bring-forward period

Less than $1.4 m


3 years

$1.4 m to less than $1.5 m


2 years

$1.5 m to less than $1.6 m


No bring-forward period, general non-concessional contributions cap applies

$1.6 m



 You can only avail of the three year bring forward rule if you are under 65 years old. The second issue may be the $500,000 lifetime limit threshold starting 1 July. You have to consider this and the $1.6 million cap when looking at the non-concessional contributions in 2017.

Last financial year was the last chance for those who exceed $1.6 million in their total superannuation balance to make non-concessional contributions.

They will be prohibited from making non-concessional contributions to super starting 1 July.  Concessional contributions within the $25,000 annual cap will not be affected by the changes. 

The total balance is the sum of all your balances across different accounts and funds so spreading your accounts across different funds may not be effective.

For couples that do not exceed the cap, they can continue to make contributions. With careful planning, couples can maximise their super, especially in pension phase. Couples may do this through spouse splitting, spouse contributions or catch up provisions from 2019, if eligible.

 Common-Sense Prevails.

It was proposed that any loan balance from the Limited Recourse Borrowing Arrangement accruing to a member should be counted in the member’s Total Super Balance. However, it was dropped so it will unlikely be included in the caps. The legislation, however, prevents funds from making loan repayments exclusively from the accumulation account as it requires the loan to be reduced by amounts taken proportionately from the members’ accounts. 

Meanwhile, if your transfer balance cap exceeds the $1.6 million cap on 1 July, the excess has to be retained in accumulation phase, where the 15% maximum tax rate applies to investment earnings, or withdrawn entirely from superannuation.

For corporate or retail funds, the assets supporting the accumulation and pension accounts are separate for both tax and investment purposes. Currently, you can use two methods for determining the tax payable in an SMSF: the proportionate and segregated methods.

The proportionate method treats all your assets as a pool and determines the tax rate that applies as a formula. The segregated method, on the other hand, requires that separate accounts are run for the different pools in the fund and tax is applied based on the income on those assets. 

However, starting 1 July, you can only use the proportionate method for SMSF tax purposes. 

Interestingly, you can still run segregated accounts for investment purposes. You should have a documented investment strategy for each account and keep them separate so all domestic equities are supporting your pension and all fixed income are supporting your accumulation fund.

There is value in putting high returning assets into the pension account and putting the lower returning assets into the accumulation account. 

Lastly, those with high super balances should consider the application of capital gains tax. Some assets will now be retained in accumulation phase and tax will be proportionately applied on the sale of any asset.

It may be good to sell all the assets and reset the cost base where all assets are in pension phase and exceeding the transfer balance cap but it can be expensive, hard and sometimes even impossible. CGT relief can be applied before 1 July.

For more information about superannuation in Australia, contact a Specialist  to discuss your particular circumstances.

For more tips and advice from other industry experts, visit

David Hasib

Disclaimer: This article contains general information; before you make any financial or investment decision you should seek professional advice to take into account your individual objectives, financial situation and individual needs. Click for more detail regarding this disclaimer.

2 responses to “Superannuation Strategies for Investors with High Balances”

  1. Bill Gilmore says:

    Hi David

    I thought I knew all there was about the changes but I didn’t know about a $500 k limit you mentioned. ‘The second issue may be the $500,000 lifetime limit threshold starting 1 July. You have to consider this and the $1.6 million cap when looking at the non-concessional contributions in 2017’.
    Can you only have 500k non-concessional for life?
    Does it only start on 1 July or does it count previous non-concessionals?


    • Chan & Naylor says:

      Thank you for your question Bill. I should have clarified the referrence to the $500,000 lifetime limit non-concessional contribution further. Basically this has been scrapt and replaced by the lower non-concessional contribution limits as outlined in the article. Apologies for the confusion.

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