From 1 July 2021, the general transfer balance cap (TBC) will be indexed from $1.6 million to $1.7 million. This means you’ll be able to get more into the tax-free pension phase.
Indexation of transfer balance cap from 1 July 2021
From 1 July 2021, the general transfer balance cap (TBC) will be indexed from $1.6 million to $1.7 million. This means you’ll be able to get more into the tax-free pension phase.
The transfer balance cap is a lifetime limit on the total amount of superannuation that can be transferred into retirement phase income streams, including most pensions and annuities.
Only individuals who have not used any of their cap, ie. not commenced a pension before 1 July 2021, will have a TBC of $1.7 million. Individuals who had a personal transfer balance account, ie. commenced a pension before 1 July 2021, and not used all of their TBC will have a transfer balance cap somewhere in between $1.6 million and $1.7 million calculated proportionally based on the highest balance of their TBC. Finally, individuals who have used all of their cap will remain at the original TBC of $1.6 million. This is illustrated in the table below.
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How to arrive at personal cap depending on TBC* range |
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Highest-ever transfer balance range ($) |
Maximum used cap (%) |
Proposed unused cap (%) |
Proposed personal TBC increase ($'000) |
Proposed personal TBC after indexation ($'000) |
|
0-399,999 |
25 |
100 |
100 |
1700 |
|
400,000-799,999 |
50 |
75 |
75 |
1675 |
|
800,000-1,199,000 |
75 |
50 |
50 |
1650 |
|
1,200,000-1,599,999 |
100 |
25 |
25 |
1625 |
|
1,600,000+ |
100 |
0 |
0 |
1600 |
|
*Transfer balance caps |
SOURCE: SMSF ASSOCIATION |
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If you wish to discuss the above or your particular requirements and circumstances in more detail, please contact our office on (02) 4601-1000.
Product Disclaimer:
This is general information only. No investment advice has been provided to you. The information in this blog is general information only and has been prepared without taking into account your personal objectives, financial information and needs. You should consider any advice in this blog in light of your personal objectives, financial situation or needs before acting on it. You may wish to consult an accountant and or licensed financial adviser to do this. Hailston + Co assumes no responsibility for any actions you take independently, and without seeking professional advice from your accountant or licensed financial advisor.
