Total Super Balance Reduction Strategies

8 Mar 2021

Written by

David Busoli, Principal

The Total Super Balance can provide eligibility to an additional $100k non-concessional contribution or previously unused concessional contributions by merely being $1 under the applicable limits as at 30 June the previous year. There are some strategies that you can adopt to help reduce a member’s total super balance.

These include;

  • making a withdrawal just prior to the end of the year. For example, withdrawing $10k in June could create eligibility to make an additional $100k NCC in July.
  • a spouse contribution split of a contribution made the previous year might also help.
  • revaluing fund assets at net.

The third option can be particularly significant. Asset valuations must be at market value for financial reporting purposes, but the total super balance is based on net realised values. If, for example, the fund holds a piece of real estate it would be expected that the difference, after selling costs, would easily be in the order of 5%. It is therefore possible to retrospectively revalue a fund asset for total super purposes. For example, a property valued at $1m at the previous 30 June for accounting purposes could be revalued to $950k for total super purposes. Naturally, the member can only take the reduced value to the extent of their share in the asset.

Keeping you up-to-date with what you need to know about SMSFs. Subscribe to get our updates delivered straight to your inbox.

More SMSF News