Q: I am interested in the apparent loophole that allows a pension fund to go above the applicable cap. In my case $1.7 million. On the ATO website it states that if your Total Super Balance on 30 June, the previous year is less than $1.48 million then non-concessional contributions for the first year can be $330,000. Thus, effectively making your new total super balance $1.81 million i.e. greater than the $1.7m cap. Can you explain any pitfalls in using this strategy to maximise funds in pension phase?
A: Remember, there’s a key difference between what we call our total super balance and what is referred to as our transfer balance cap. Although you refer to it as a loophole, it’s not really a loophole. It’s just the way that the legislations interact with each other.
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