UPDATED TRANSFER BALANCE CAP TO COME INTO EFFECT 1 JULY 2021

AUTHOR: Sarah Bowrey

The Australian Taxation Office (ATO) recently announced it will increase the Transfer Balance Cap (TBC) for individuals relying on a retirement phase income stream.

At the beginning of the new financial year, the TBC will increase from $1.6 to $1.7 million.

The TBC is a limit on how much superannuation can be transferred from accumulation superannuation accounts to tax-free ‘retirement phase’ accounts.

When the amount in your retirement phase account grows over time (eg. through investment earnings) to more than $1.7 million, you won’t exceed your cap. If the amount in your retirement phase account goes down over time (eg. through decreases in investment values or pension payments), you can’t 'top it up' if you have already used all of your cap space.

Key points and potential implications to be aware of going forward regarding this increase include:

• The defined benefit income cap, currently $100,000 for most people receiving income from capped defined benefit income streams, will be indexed to $106,250
• The limit which determines if an individual has a non-concessional contributions cap of nil, will increase from $1.6 million to $1.7 million
• The limit which determines if an individual is entitled to use the non-concessional bring forward arrangements will increase from $1.6 million to $1.7 million
• The limit which prohibits an individual from claiming the tax offset for superannuation contributions they make on behalf of their spouse will rise from $1.6 million to $1.7 million
• The limit which determines if an individual is entitled to a co-contribution will increase to $1.7 million.

Due to its complicated nature, we highly recommend you speak with your accountant if you believe that this will affect you and your retirement and estate planning. PVW Partners has expert accounts specialising in Superannuation and Self-Managed Super Funds and can assist you with any questions you may have.

You can contact the office on 4721 5000 or via info@pvwpartners.com.

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About the Author: Sarah has over 20 years’ experience in taxation, accounting, and business advisory services, starting as an Undergraduate with PricewaterhouseCoopers.

She has worked in the PricewaterhouseCoopers Brisbane office, as well as supporting the PricewaterhouseCoopers team nationally on all areas of the Self-Managed Superannuation Fund compliance process.

Over the past two decades, Sarah has assisted many clients across a vast array of industries, including high net worth individuals.

Sarah grew up in North Queensland and is extremely passionate about PVW Partners’ focus on Regional Australians Growing Regional Australia.

AREAS OF EXPERTISE

• Tax and accounting compliance for businesses
• High net worth individuals and families
• Taxation and regulatory advice around superannuation matters (SMSF Administration, SMSF Audit)