06 June 2023
Transfer Balance Caps to increase from 1 July 2023
From 1 July 2023, the indexation of the general Transfer Balance Cap will increase by $200,000 from $1.7 million to $1.9 million.
What is the Transfer Balance Cap?
The transfer balance cap is the maximum amount of superannuation savings that can be transferred into a retirement phase account, including a pension account. From 1 July 2023, an individual commencing a retirement phase for the first time will be able to transfer $1.9 million of their superannuation savings into a tax-free retirement phase account.
Why should you look to take advantage of this?
The increase in the cap will enable individuals to contribute more into their superannuation funds. Individuals with a balance less than $1.9 million can put any surplus cash into their superannuation fund, tax-free.
For individuals who have commenced pensions, there is a strategy that we can look at to take advantage in the increase in the cap to add more money to your superannuation account using surplus funds in your accumulation account. To discuss if this strategy is right for you, talk to AR & B Advisors today.
Could a recontribution strategy work for you?
The increase in total superannuation balance cap will allow individuals aged between 67 and 75 who have commenced pensions eligible to consider a recontribution strategy.
A recontribution strategy enables an individual to increase the tax-free component of their superannuation fund thereby reducing tax that your estate would have to pay upon death. For more information on a recontribution strategy speak with your Advisor.
Contribution caps remain unchanged
Concessional contribution caps will remain unchanged at $27,500 for 2023-24. The non-concessional contribution caps will also not increase, remaining at $110,000 per annum. The thresholds for making non-concessional contributions will be increasing as this total superannuation balance measure equals the general transfer balance cap.
The total superannuation balance thresholds for using the bring-forward rule are also increasing as per the table below:
| Total super balances at 30 June 2023 | Bring forward rules |
|---|
| Less than $1.68 million | $330,000 - 3 year period |
| $1.68 million to less than $1.79 million | $220,000 - 2 year period |
| $1.79 million to less than $1.9 million | $110,000 - no bring forward |
| $1.9 million or more | No non-concessional contribution |
For superannuation advice or to discuss how these changes may affect your retirement plans, contact an AR & B Advisors SMSF Specialist today on 9321 3362.
Selling your home? Consider a downsizer contribution
For older Australians looking to retire, downsizing the family home is often a key consideration of their retirement plan. But did you know downsizing can help boost your income in retirement?
Selling the family home for a smaller house or moving to a better location can be a key strategy to release the equity built over the years. Known as a downsizer contribution you can use this equity to add a cash surplus into your superannuation, giving it a boost.
What is a downsizer contribution?
The downsizer contribution allows older Australians to contribute up to $300,000 from the proceeds of the sale or part sale of their home into their superannuation fund.
As of 1 January 2023 the eligible age for a downsizer contribution was lowered to 55 years or older. There is no maximum age limit.
What are the benefits of the downsizer contribution?
It doesn’t count towards any of the contribution caps and it will not affect your total superannuation balance until it is recalculated at the end of the financial year. However, it will count towards your transfer balance cap upon the commencement of a pension.
It is an after-tax contribution, so no tax is paid on the way in.
It is not a requirement to purchase a new home or move to a smaller or cheaper home.
If you are thinking of selling your house, contact an AR & B Advisors SMSF Specialist to discuss downsizer contributions on 9321 3362.
Meet your specialist superannuation team
Having a sound superannuation strategy in place is vital to help you reach your retirement goals. Over the years, AR & B Advisors has created a specialist team to help you look after and grow your superannuation nest egg.
Our dedicated and experienced self-managed superannuation fund specialists are Authorised Representatives of SMSF Advisers Network Pty Ltd. We combine advanced technology with personal, expert advice to provide a comprehensive value-for-money service for our clients.
The superannuation team is led by Principal and licensee Jason Barbetti. Jason is licensed to provide advice on superannuation strategies and contributions. Jason is supported by Peter Yang, Senior Superannuation Accountant and Loren Zerafa, SMSF Accountant.
Get in touch with one of AR & B Advisors’ superannuation specialists today to help you plan for your retirement.