Transfer balance cap
What is the cap?
9.1 What is the transfer balance cap?
The general transfer balance cap (GTBC) limits the amount a member can move into a retirement phase pension. Any amounts exceeding the cap will need to be moved out of retirement phase and, may potentially trigger liability for additional tax as a penalty for exceeding the cap.
Transfer balance cap
The transfer balance cap commenced on 1 July 2017 and was set at $1.6 million The cap is indexed at the Consumer Price Index (CPI) each year and rounded down to the nearest $100,000.
|Year||Transfer balance cap|
|2017/18 to 2020/21||$1,600,000|
|From 1 July 2021||$1,700,000|
Indexation of the general transfer balance cap
From 1 July 2017, the cap will be increased to $1,700,000, therefore, there will no longer be a single cap applying to all members. Members will have their own personal transfer balance cap (PTBC) in the range of $1.6 million to 1$.7 million depending on their circumstances.
If a member has a transfer balance account before indexation, their personal transfer balance cap will be:
- $1.6 million at any time between 1 July 2017 and indexation occurring on 1 July 2021
- between $1.6 million and $1.7 million in all other cases, based on the highest ever balance of a member's transfer balance account.
Note that indexation of the general transfer balance cap has implications for other caps and limits that may apply to a member:
- Making non-concessional contributions
- Ability to use the bring-forward provisions for non-concessional contributions
- Eligibility for the co-contribution
- Eligibility for the tax offset for spouse contributions
- The defined benefit income cap (indexed to $106,250 from 1 July 2021)
This technical resource is intended for the use of financial advisers only. It is current as of the date of publication but may be subject to change. This publication has been prepared without taking into account a potential investor's objectives, financial situation, needs or objectives. Before making a recommendation based on this material, you should consider its appropriateness based on the client's objectives, financial situation and needs. Rainmaker Group is not a registered tax agent under the Tax Agent Services Act 2009. Your client should refer to a registered tax agent before relying on information published herein that may impact their tax obligations, liabilities or entitlements.
Last modified: Thursday, May 6, 2021