Understanding Total Super Balance TSB and its Impact on Contributions and Strategies
The Total Super Balance TSB is a critical measure that determines your eligibility for various superannuation contributions and benefits. By understanding TSB rules and thresholds, you can optimise your retirement planning strategies. This guide will explain how TSB is calculated, its impact on contributions, and key strategic considerations.
What is Total Super Balance (TSB)
Your Total Super Balance (TSB) represents the total value of your superannuation interests as of June 30 of the previous financial year. It includes:
Accumulation Phase Interests: The withdrawal values of your accumulation accounts. Transition to Retirement TTR Income Streams: Not in the retirement phase. Deferred Super Income Streams: Those yet to commence. Defined Benefit Interests: Not in the retirement phase. Retirement Phase Interests: The value of transfer balance accounts, adjusted for relevant credits and debits. AccountBased Pensions ABPs or Term Allocated Pensions TAPs: Their withdrawal values. In Transit Rollovers: Amounts rolled out of one fund but not yet received by another as of June 30. Limited Recourse Borrowing Arrangements LRBA: The members share of outstanding LRBA balances if the borrowing involves related parties or follows a condition of release.
Exclusions to TSB
Certain contributions reduce the TSB, providing tax and contribution cap relief. These include:
Structured Settlement Contributions: Resulting from personal injury or compensation payments.
Contributions Impacted by TSB
Your TSB impacts different types of contributions:
NonConcessional Contributions NCCs: Thresholds (2024/25): TSB < $1.66 million: Eligible for up to $360,000 (3-year bring-forward rule). TSB $1.66m - $1.9m: Reduced NCC cap. TSB ≥ $1.9m: Not eligible for NCCs.
Government co-contribution: Available if TSB is below $1.9 million.
Spouse Contribution Tax Offset: Eligibility applies if the receiving spouse's TSB is below $1.9 million.
Concessional Contributions CCs: Unused CC cap amounts can be carried forward if TSB is below $500,000. Work test exemption applies for TSB under $300,000.
Contributions Not Impacted by TSB Certain contributions are not affected by TSB, including: Concessional Contributions: Within the annual cap. General cap: $30,000 for 2024/25. Downsizer Contributions: Eligible individuals aged 55 or older can contribute proceeds from selling their home. Small Business CGT Cap Contributions: Proceeds from eligible business sales. Personal Injury Contributions: Structured settlements or compensation payments.
Strategic Considerations for Managing TSB
To effectively manage your TSB, consider the following strategies:
Optimise NCCs: Use the bringforward rule to maximise contributions. Plan Contributions: To maximise benefits before reaching higher TSB thresholds. Leverage Carry Forward CCs: Use unused concessional caps strategically when TSB is below $500,000. Downsizer Contributions: Consider these contributions regardless of TSB to boost super balances efficiently. Preserve Retirement Benefits: For members close to TSB thresholds, avoid unnecessary rollovers or withdrawals that could inflate your TSB. Structured Settlement Contributions: Utilise these to reduce TSB and maintain eligibility for other benefits.
Example: TSB and Contribution Eligibility
Scenario:
Jessica’s TSB as of 30 June 2024 is $1.7m.
Contribution options for 2024/25:
NCC cap: $240,000 (2-year bring-forward rule).
Government co-contribution: Not eligible.
Spouse contribution tax offset: Eligible.
By planning strategically, Jessica can maximize her super contributions within the available limits.
