The ATO has announced there will be changes to the general transfer balance cap from 1 July 2021.
From this date, every individual will have their own personal transfer balance cap of between $1.6 and $1.7 million, depending on their circumstances.
How this change might impact you depends on:
- If you had a transfer balance account before 30 June 2021.
- Whether you had a transfer balance account prior to indexation occurring and, at any time between 1 July 2017 and 30 June 2021, the balance of your account was $1.6 million or more.
- If you had a transfer balance account prior to indexation occurring and the highest ever balance of your transfer balance account between 1 July 2017 and 30 June 2021 was never $1.6 million or more.
Make sure you talk to your accountant about how these changes may impact your directly, as all circumstances are different.
If you haven’t already spoken to your accountant about creating or updating your retirement plan – you should do that as soon as possible. It is never too early to start!
Impact on Retirement Phase Income
If you start a retirement phase income stream for the first time on or after 1 July 2021, you will have a personal transfer balance cap of $1.7 million.
If you had a transfer balance account before 1 July 2021, your personal transfer balance cap 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.
Before 1 July 2021, you can see your highest ever balance in your transfer balance account. You can also see if your personal transfer balance cap will be proportionally indexed.
From July 2021, you will be able to see your personal transfer balance cap in ATO online. This will be the only place you can see your personal transfer balance cap if you had a transfer balance account before 1 July 2021.
Indexation of the general transfer balance cap 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 concessional contribution to super on behalf of your spouse and want to claim a tax offset.
Which balance cap will apply to you?
| If | Then |
|---|---|
| You start your first retirement phase income stream on or after 1 July 2021 | Your personal transfer balance cap will be $1.7 million. |
| You started a retirement phase income stream before 1 July 2021, | Your personal transfer balance cap 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.See: Transfer balance cap changes |
| You were a child death benefit beneficiary before indexation and you only receive a child death benefit income stream. | Your child death benefit transfer balance cap increment won’t change.If you also receive another retirement phase income stream your personal transfer balance cap may increase slightly.See: Changes affecting child death benefit income streams |
| You will be receiving income from a capped defined benefit income stream and:you are 60 years or overthe income stream is a death benefit and the member was over 60 at 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.See: Changes affecting capped defined benefit income streams |
| 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.See: Non-concessional contributions cap changes |
| 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.See: Co-contribution changes |
| 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.See: Spouse tax offset changes |
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