Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 198

Why 'total superannuation balance' is important for SMSFs

'Total superannuation balance' is a term all superannuation fund members should understand, especially those people with large balances. It will impact how much a person can contribute into their SMSF, whether they qualify for certain superannuation entitlements, and which method their fund can use to determine tax-exempt income from 1 July 2017.

A member’s total superannuation balance is calculated by adding together their accumulation account balance, retirement pension account balance, and any money rolled into their SMSF that has not been allocated to either their accumulation or retirement accounts, and then subtracting any structured settlement contributions received in their SMSF.

Many articles have been written on the $1.6 million transfer balance cap. This is the total amount an SMSF member can have in their retirement pension account from 1 July 2017. However, a member’s total superannuation balance is equally important, for the following reasons:

  • Non-concessional contributions: a member’s total superannuation balance must be below the general transfer balance cap ($1.6 million for 2017/2018) in order to make non-concessional contributions into their SMSF from 1 July 2017. The balance is measured at 30 June of the previous year in which the contribution is made and is tested each financial year. This means a member under the age of 65 will not be able to use any unused portion of their bring-forward non-concessional cap if their total balance is $1.6 million or over. As the limit is tied and indexed to the general transfer balance cap, it will increase over time.
  • Spouse contribution tax offset: A spouse can claim a tax offset of up to $540 for making up to $3,000 in non-concessional contributions for their low-income spouse. This is provided the low-income spouse’s total superannuation balance does not exceed the general transfer balance cap of $1.6 million and their total non-concessional contributions received in the relevant financial year do not exceed the $100,000 annual limit. The low-income spouse must also be under the age of 70 and meet the part-time work test (i.e. 40 hours over 30 consecutive days) if aged 65 to 69, both the contributing spouse and the low-income spouse must be Australian residents for income tax purposes and not be living apart on a permanent basis at the time the contribution is made. The income threshold for the low-income spouse must not exceed $40,000 from 1 July 2017.
  • Catch-up concessional contributions: The new law allows any unused concessional contributions (the annual cap will be $25,000) from 1 July 2018 to be carried forward for up to five consecutive years. This is provided the member’s total superannuation balance is less than $500,000. Only unused amounts accrued after 1 July 2018 will be eligible. Amounts carried forward that have not been used after five years will expire. It is important that members maintain accurate records of contributions made into their SMSF.
  • Superannuation co-contributions: In order to be eligible for up to $500 of the Government’s superannuation co-contribution, from 1 July 2017 a member’s total superannuation balance must be less than the transfer balance cap on 30 June of the year before the relevant financial year. The member must also not have contributed more than the $100,000 non-concessional contributions cap, their total income must be below the higher income threshold (i.e. $51,021 for 2016/2017), and 10% of their total income must be from employment related activities, carrying on a business or a combination of both.
  • Segregated assets method: From 1 July 2017, SMSFs will no longer be permitted to apply the segregated assets method to determine their tax-exempt income if any member has more than a $1.6 million superannuation balance and the member is in pension phase.

SMSF members must understand how their entitlements will be affected under the new ‘total superannuation balance’ concept to not only avoid penalties but to also take advantage of opportunities to accumulate more for their retirement savings.


Monica Rule is an SMSF Specialist and author of 'The Self Managed Super Handbook – Superannuation Law for SMSFs in Plain English', see

ron f
May 07, 2017

If you can use the segregated method to calculate (add-up) your ECPI when total super is less than $1.6m - then why does the same method suddenly become incorrect over $1.6m? Claiming the unsegregated method must be then used and an approximation of ECPI using an actuary's certificate will certainly mean some will pay tax on pension income. This is because the actuarial calculation is full of assumptions, approximations and averages. Unless one does the segregated calculation first then you will never know just how much more (or even less) tax you could be paying. Just try obtaining an actuary certificate and see what i mean.

April 26, 2017

The article you refer to says, in the second last paragraph: "Also, if a person’s total balances in all superannuation funds exceeds $1.6 million, it is not possible to make more non-concessional contributions." I can't see how it leads you to believe otherwise.

April 21, 2017

I am confused about non-concessional contributions after 1/7/2017? I am over 65, have $1.9mil in a combined SMSF and CSS pension. I understand what I have to do to conform to the transfer balance cap. Can I then make a non-concessional contribution next financial year to my new accumulation fund? The previous article "five urban myths about super changes" lead me to believe I could, this article seems to be saying I cant. Of course I understand I will have to pass the work test first.

April 20, 2017

Useful article. Thanks.
And the treasurer and deputy treasurer said their changes would only affect 4% of superannuants.
Their changes hit the government at the ballot box and when people realise the total impact of these changes and the complexity after July 2017 I think it will hit them at the next election whcih could be some time late 2018.


Leave a Comment:



Do new rules create incentive for single member SMSFs?

Tips when taking large withdrawals from super

Indexation complication! Four changes you need to know


Most viewed in recent weeks

Too many retirees miss out on this valuable super fund benefit

With 700 Australians retiring every day, retirement income solutions are more important than ever. Why do millions of retirees eligible for a more tax-efficient pension account hold money in accumulation?

Is the fossil fuel narrative simply too convenient?

A fund manager argues it is immoral to deny poor countries access to relatively cheap energy from fossil fuels. Wealthy countries must recognise the transition is a multi-decade challenge and continue to invest.

Reece Birtles on selecting stocks for income in retirement

Equity investing comes with volatility that makes many retirees uncomfortable. A focus on income which is less volatile than share prices, and quality companies delivering robust earnings, offers more reassurance.

Welcome to Firstlinks Election Edition 458

At around 10.30pm on Saturday night, Scott Morrison called Anthony Albanese to concede defeat in the 2022 election. As voting continued the next day, it became likely that Labor would reach the magic number of 76 seats to form a majority government.   

  • 19 May 2022

Keep mandatory super pension drawdowns halved

The Transfer Balance Cap limits the tax concessions available in super pension funds, removing the need for large, compulsory drawdowns. Plus there are no requirements to draw money out of an accumulation fund.

Is it better to rent or own a home under the age pension?

With 62% of Australians aged 65 and over relying at least partially on the age pension, are they better off owning their home or renting? There is an extra pension asset allowance for those not owning a home.

Latest Updates

SMSF strategies

30 years on, five charts show SMSF progress

On 1 July 1992, the Superannuation Guarantee created mandatory 3% contributions into super for employees. SMSFs were an after-thought but they are now the second-largest segment. How have they changed?

Investment strategies

Anton in 2006 v 2022, it's deja vu (all over again)

What was bothering markets in 2006? Try the end of cheap money, bond yields rising, high energy prices and record high commodity prices feeding inflation. Who says these are 'unprecedented' times? It's 2006 v 2022.


Tips and traps: a final check for your tax return this year

The end of the 2022 financial year is fast approaching and there are choices available to ensure you pay the right amount of tax. Watch for some pandemic-related changes worth understanding.

Financial planning

Is it better to rent or own a home under the age pension?

With 62% of Australians aged 65 and over relying at least partially on the age pension, are they better off owning their home or renting? There is an extra pension asset allowance for those not owning a home.


Listed infrastructure: finding a port in a storm of rising prices

Given the current environment it’s easy to wonder if there are any safe ports in the investment storm. Investments in infrastructure assets show their worth in such times.

Financial planning

Power of attorney: six things you need to know

Whether you are appointing an attorney or have been appointed as an attorney, the full extent of this legal framework should be understood as more people will need to act in this capacity in future.

Interest rates

Rising interest rates and the impact on banks

One of the major questions confronting investors is the portfolio weighting towards Australian banks in an environment of rising rates. Do the recent price falls represent value or are too many bad debts coming?



© 2022 Morningstar, Inc. All rights reserved.

The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. Any general advice or ‘regulated financial advice’ under New Zealand law has been prepared by Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892) and/or Morningstar Research Ltd, subsidiaries of Morningstar, Inc, without reference to your objectives, financial situation or needs. For more information refer to our Financial Services Guide (AU) and Financial Advice Provider Disclosure Statement (NZ). You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.

Website Development by Master Publisher.