From www.smsfadviser.com: Using a contribution reserve is an effective strategy for clients looking to reduce their taxable income after a profitable financial year.

With the transfer balance cap raised to $2 million, clients can now make non-concessional contributions if their balance is below this threshold, potentially avoiding Division 293 tax on contributions exceeding $250,000.

Proper documentation and a Statement of Advice are essential to avoid complications with the ATO.