Question 1

Hi Craig, I am a regular reader of your super/financial responses to readers’ questions, and I find your responses very helpful. Re TSBs (Total Super Balance), I was under the impression that if you had a TSB of $1.6 million (when that was the limit about three years ago) that you could not increase your TSB to the current TSB of S1.9 million. Is that correct, as your previous answer seems to indicate that you can increase your TSB to the higher limit? Thanks and regards, Bruce

Thanks Bruce.

There is a difference between your Total Super Balance (TSB), and your Personal Transfer Balance cap (TBC).

There is confusion around this, especially because they are set at the same amount. Initially, as you have stated, that amount was $1.6 million but with indexation it now sits at $1.9 million.

If your TSB is over the allowable amount, you can no longer make non-concessional (after tax) contributions to super.

However, once the TSB limit is indexed you can take full advantage of the indexation and utilise the new higher amount, in this case $1.9 million.

However, that it not the case for the TBC, which is the amount of super you can convert to a retirement/pension phase.

If you fully maximised the general transfer balance cap, then you cannot move further funds to pension.

If you only partially used the general transfer balance cap, then you can move further funds to pension.

As an example, when the general transfer balance cap was $1.6 million, let’s say you commenced a pension of $1.2 million.

Now the transfer balance cap is $1.9 million. An increase of $300,000.

In this example, your personal transfer balance cap would be $475,000.

This means you could transfer another $475,000 to pension. This is made up of:

• $400,000 unused from your first pension ($1.6 million less $1.2 million)
• $75,000 proportional indexation (as you already used 75 per cent of the TBC, you only get 25 per cent of the indexed amount, i.e. 25 per cent of $300,000).

The above is a very simplified example.

If you log in to MyGov and have your ATO details linked, this will indicate what your Total Super Balance is.

Additionally, if you have already commenced a superannuation income stream (such as an account-based pension) it will also show what your Personal Transfer Balance Cap is, and whether you have any room left in it.

If you have not already done this I would recommend you do so. It provides some very handy information.

Question 2

Hi Craig. Love your column and a must read for me. I moved interstate from one state government job to another in 2007. I had to join up to the mandated super fund in my new state and was swayed by the frequent promos to roll over my super balance from my previous state, a modest amount of $23,000, into my new one. I did that and was shocked to have around $5000 (21 per cent) of that balance paid in tax. I never would have rolled it over if I expected that and should have read the fine print about getting financial advice before doing so.

My question, is that portion of my super balance, now a healthier $520,000, considered tax free in as much as could I access the cash before I meet a condition of release now I’m 62?  Nothing in my past super fund statements of the past 16 years mentions anything about that rollover amount. Thanks.

Hello, and thanks for your comments.

Some federal government, state government and old corporate super funds operate a little differently to regular industry and retail super funds.

These old-style funds were not required to deduct contributions tax of 15 per cent on pre-tax contributions (employer or salary sacrifice contributions). Instead, a tax was levied when withdrawing or moving out of these funds. Additionally, they maybe are not deducting tax on superannuation earnings, again at 15 per cent.

Funds held in superannuation can be made up of three tax components:

1: Tax-free component – This component is always paid out tax free
2: Taxable Component ‘Taxable Element’ – Once you turn 60 this is paid out tax free
3: Taxable Component ‘Untaxed Element’ – There is always tax associated with this element. Depending on your age and amount.

The vast majority of people only have the first two components.

You must have been in one of the old-style funds initially, with an ‘Untaxed’ element, which is why tax was deducted upon leaving that fund.

Upon hitting the new fund, it then would have turned into a ‘taxed’ element.

I’m not sure why, perhaps super funds think this will be too confusing, but they don’t display your tax components on your statements.

You can contact your current super fund and they should easily be able to provide you with your current tax components.

As you are now over 60, so long as you don’t have any ‘Untaxed’ elements, then all your super can be paid tax free. Either via a lump sum or a pension (or a combination).

If you do have any untaxed element, then it would be worthwhile getting some advice.

Question 3

My wife and I were recently approved for part aged pensions, including supplements, and each receive $661.70 a fortnight. In addition, we receive income stream payments from our UniSuper accounts. My wife receives $1000 a fortnight and I receive $850 a fortnight. These are our only sources of income. Will we be liable for income tax on any of this?

No, you will not be liable for any income tax.

Payments from super over the age of 60 are tax free. While the age pension payments are taxable, on their own they do not create a tax liability.

For the 2024-25 financial year, no income tax liability is payable in the following scenarios and income thresholds (also called ‘the effective tax-free threshold’ once we consider various tax offsets):

Single = $22,575
Single, over age pension age = $34,656
Member of a couple over age pension age = $31,006 (each).

Craig Sankey is a licensed financial adviser and head of Technical Services and Advice Enablement at Industry Fund Services.

Disclaimer: The responses provided are general in nature, and while they are prompted by the questions asked, they have been prepared without taking into consideration all your objectives, financial situation or needs.

Before relying on any of the information, please ensure that you consider the appropriateness of the information for your objectives, financial situation or needs. To the extent that it is permitted by law, no responsibility for errors or omissions is accepted by IFS and its representatives.

This column also appears in our sister publication The New Daily, which is owned by Industry Super Holdings.