For 2023/24, the Transfer Balance Cap and Total Super Balance Cap are both set at amounts up to $1.9 million.
Transfer Balance Cap
The Transfer Balance Cap is the highest amount of super that you can transfer into the retirement phase. If you are moving your super into a retirement account and have more in your super than the Transfer Balance Cap, you can leave the extra in your super if you wish.
- For example, Bryan has $2.1 million in his super accounts. He wishes to open an Income Stream account. He chooses to move the maximum amount of $1.9 million into his new Income Stream. And he keeps the $200,000 above the $1.9 million in his existing super account.
The Transfer Balance Cap includes all the money that you’ve moved into the retirement phase. This includes however many income stream-style accounts you have. Defined benefit lifetime pensions also count towards this Cap. This uses the value that is calculated when your annual lifetime pension entitlement is multiplied by 16.
- For example, Geoff’s defined benefit lifetime pension is $90,000 a year. Multiplying $90,000 by 16 gives Geoff a Transfer Balance Cap figure of $1.44 million. This means Geoff’s Balance for this purpose is $560,000 below the $1.9 million cap. It means that Geoff could use up to $560,000 to open an Income Stream account. He could do this, for example, with money in his additional voluntary contribution account if he wishes.
If you previously opened a retirement Income Stream, your Transfer Balance Cap may be lower than the maximum $1.9m cap. You can find your personal Transfer Balance Cap on ATO Online Services.
Total Super Balance Cap
The Total Super Balance Cap is the same dollar value as the Transfer Balance Cap. That is, the same $1.9 million limit for 2023/24.
While the Transfer Balance Cap impacts on your retirement, the Total Super Balance Cap has implications for your super. If your Total Super Balance across all your super accounts totals $1.9 million or more, there are some super measures that you won’t be able to take advantage of. These are:
- making any non-concessional contributions to your super
- the government’s co-contribution
- the spouse tax offset
A higher balance in your super
If you want to make a non-concessional contribution to your super (such as a transfer from your bank account) and your total super balance at the end of last financial year was at or above the current year’s $1.9m cap, your non-concessional contribution cap is reduced to zero. You will be heavily taxed on any non-concessional contributions you make to your super.
However, if your total super balance is under the Total Super Balance Cap at the end of the previous financial year, you could make non-concessional contributions. Your total super balance (combined across all your super accounts) will determine how much you may be able to contribute as non-concessional contributions.
- If you had between $1.79 million and $1.9 million in your super, you could make up to one year’s worth of non-concessional contributions this year (2023/24).
- If you had between $1.68 million and $1.79 million in your super, you could make up to 2 years’ worth of non-concessional contributions this year (2023/24) which would include using the contribution cap for this year and bringing forward the contribution cap for next year. Doing that, however, means you couldn’t make non-concessional contributions next year because you would already have already used next year’s cap.
- If you had less than $1.68 million at 30 June 2023 (the end of last financial year), you could potentially use 3 years’ worth of non-concessional caps, using this year’s cap and bringing forward the cap for the next 2 years. It means, however, you couldn’t make non-concessional contributions next year or the year after because you would have already used those 2 years’ caps.
|For example, Risha had $2m in his super on 30 June 2023. He cannot make any non-concessional contributions to his super this year.
Mick had $1.8 million in his super on 30 June 2023 so he can contribute up to $110,000 to his super this year (2023/24) by non-concessional contributions. That is, he can contribute up to the annual non-concessional cap for 2023/24 of $110,000.
Cindy had $1.75 million in her super on 30 June 2023, so she can contribute up to $220,000 to her super this year (2023/24) in non-concessional contributions. That is, up to this year’s non-concessional contribution cap and the non-concessional cap for next year. Doing this means she won’t be able to make any non-concessional contributions next year as she’s brought forward her allowance for next year into this year.
Matthew had $780,000 (that is, less than $1.68 million), so he can contribute up to $330,000 to his super this year in non-concessional contributions. That is up to this year’s $110,000 non-concessional cap plus bringing forward the same amounts from the coming 2 years. In doing this, he won’t be able to contribute non-concessional contributions next year or the one after. This is because he’s maxed out his non-concessional caps for these 2 future years.
There are also age restrictions that can apply. See the ATO website for more information.
A lower balance in your super
While there are restrictions if your total super balance is near, at or above the Total Super Balance Cap, there are benefits you may be able to take advantage of if your total super balance is lower.
If your total super balance was under $500,000 at the end of last financial year, you may contribute above the annual concessional contribution cap this year (that is a cap of $27,500 for 2023/24) by using previous years’ unused concessional contribution caps from up to the previous 5 years. Read more about this on our website.
If you meet all the eligibility conditions, you may receive a government super co-contribution. These include making non-concessional contributions and a total super at last 30 June under the Total Super Balance Cap.
You can read more about the Government Co-contribution on the ATO website.
The Spouse Tax Offset
If your total super balance at 30 June of last financial year was below the Total Super Balance Cap, your spouse may be able to claim the spouse tax offset if they make the required type of contributions into your super. They need to also meet the other eligibility conditions. The ATO’s website has more information.
The information in this post is provided as a guide only and should not be relied on. You need to consult with the ATO’s website for accurate and up-to-date figures. We strongly recommend that you speak to your financial planner before making decisions about your superannuation.