What is the Transfer Balance Cap?
The Transfer Balance Cap (TBC) began on 1 July 2017. It is a lifetime limit on the total amount of superannuation that can be transferred into retirement phase income streams, including most pensions and annuities.
All retirement phase income streams and retirement phase death benefit income streams you receive count towards your TBC. The age pension (or other types of government payments) and pensions received from foreign super funds do not count towards your TBC.
The general TBC, currently $1.6 million, will be indexed to $1.7 million on 1 July 2021.
When the general TBC is indexed to $1.7 million, there won’t be a single cap that applies to all individuals. Every individual will have their own personal TBC of between $1.6 and $1.7 million, depending on their circumstances.
If you start a retirement phase income stream for the first time on or after 1 July 2021, you will have a personal TBC of $1.7 million.
If you had a transfer balance account before 1 July 2021, your personal TBC will be:
- $1.6 million if, at any time between 1 July 2017 and 30 June 2021, the balance of that account was $1.6 million or more
- between $1.6 and $1.7 million in all other cases, based on the highest ever balance of your transfer balance account.
You can view all transfer balance cap information in ATO online.
Before 1 July 2021, you can see your highest ever balance in your transfer balance account. You can also see if your TBC will be proportionally indexed.
From July 2021, you will be able to see your TBC in ATO online. This will be the only place you can see your personal TBC if you had a transfer balance account before 1 July 2021.
Indexation of the general TBC changes other caps and limits that may apply to you, if you make:
- non-concessional contributions to your super
- a non-concessional contribution to your super and are eligible for a cocontribution
- a non-concessional contribution to super on behalf of your spouse and want to claim a tax offset.
Summary of Changes
The table below is a summary of how you will be affected when the general TBC is indexed:
In terms of making non-concessional contributions prior to 30 June 2021, each situation is different and there may be opportunities to maximise your contributions given the above changes and the potential changes to the contribution caps.
Please contact us for a discussion and/or review of your situation if any of the above circumstances affect you or if you wish to maximise your contributions while taking into account the above changes.
Sources:
ATO – Transfer balance cap
ATO – Indexation of the general transfer balance cap
