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 co-contribution
- 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.
|You start your first retirement phase income stream on or after 1 July 2021.||Your personal TBC will be $1.7 million.|
|You started a retirement phase income stream before 1 July 2021.||Your personal TBC may increase slightly, unless, between 1 July 2017 and 1 July 2021, the balance in your transfer balance account was $1.6 million or more.|
|You were a child death benefit beneficiary before indexation and you only receive a child death benefit income stream.||Your child death benefit TBC increment won’t change.
If you also receive another retirement phase income stream your personal TBC may increase slightly.
|You will be receiving income from a capped defined benefit income stream AND you are 60 years or over the income stream is a death benefit and the member was over 60 at the time of death.||The money your fund withholds from your income stream may change.
The defined benefit income cap will increase to $106,250 for most individuals.
You may need to review the amounts from these income streams that you include in your income tax return.
The maximum amount of the 10% pension tax offset you may be able to claim will increase.
|You make a non-concessional contribution to your super on or after 1 July 2017 and you have a superannuation balance of $1.7 million or more on 30 June 2021.||You will exceed your non-concessional contributions cap.|
|You want to receive a government co-contribution after contributing to your fund on or after 1 July 2021, and you have a superannuation balance of less than $1.7 million on 30 June 2021.||You can if you meet all requirements. The limit to receive a co-contribution will increase from $1.6 to $1.7 million.|
|You want to claim the spouse tax offset for super contributions and your spouse has a superannuation balance of less than $1.7 million on 30 June 2021.||You can if you meet all requirements.
The spouse total superannuation balance limit will increase from $1.6 to $1.7 million.
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 your financial advisor 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.
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