Paul Benson, a Certified Financial Planner at Guidance Financial Services, recently shared expert advice on how to save, invest, and make the most of your money. A key takeaway is how to handle the excess funds when your super balance hits the transfer balance cap.

### A $2.1 million limit The transfer balance cap determines the maximum amount you can transfer from your super account to a pension account without incurring additional tax. This cap has recently increased to $2.1 million. Paul Benson pointed out that if you go over this limit, your excess super balance will be taxed at 15 per cent on earnings and 10 per cent on capital gains.

The good news is that you don't need to be concerned about overshooting your cap. You can simply withdraw your excess funds when it's no longer tax-effective. This pool of savings can be useful for covering lump-sum expenses, such as a car update or a big trip.

### Transferring a share portfolio If you're looking to consolidate your investments, you may be planning to transfer a share portfolio from your personal trading account to a Self-Managed Super Fund (SMSF) account. Paul advises that doing an in-specie transfer (transferring shares directly to your super fund) will be considered a sale, triggering capital gains tax.

He warns that while this can save you on brokerage costs, the paperwork involved may outweigh these savings. It's essential to weigh the pros and cons before making a decision.

### Investing for your teenager For young investors, such as your 18-year-old daughter, Paul suggests exploring low-cost investment options that offer automated regular savings plans at no extra cost. This is a great opportunity to help her learn about investing early on.

### SMSF borrowing changes Paul also touched on the recent changes to SMSF borrowing rules. These changes affect new investments, but existing property loans in SMSFs won't be directly affected. If you're considering borrowing to buy property through your SMSF, it's crucial to review your strategy and make informed decisions.

### Conclusion When dealing with excess super funds reaching the transfer balance cap, it's essential to consider your options carefully. Topping up your super or investing outside of it can be attractive, but it's crucial to do your research and make informed decisions.

### Key Facts

  • The transfer balance cap is $2.1 million.
  • Excess super balances are taxed at 15 per cent on earnings and 10 per cent on capital gains.
  • You can withdraw excess funds when it's no longer tax-effective.
  • In-specie transfers may trigger capital gains tax.
  • Young investors should explore low-cost investment options.
  • SMSF borrowing changes don't directly affect existing property loans.