Transfer Balance
Caps
https://www.ato.gov.au/individuals/super/super-changes/New-transfer-balance-cap-for-retirement-phase-accounts/
What is the transfer balance cap?
The Transfer Balance Cap (TBC) limits the total amount that a member can transfer from your accumulation super account(s) to tax-free ‘retirement phase’ accounts to receive your pension income.
The transfer balance cap will start at $1.6m, and will be
indexed in line with the consumer price index (CPI), rounded down to the
nearest $100,000. The amount of indexation that you are entitled is calculated
proportionally based on your available cap space and only the amount of
remaining cap space is indexed.
Any retirement phase income streams commenced before 1 July
2017 will be counted towards the transfer balance cap on 1 July 2017. Any new
pension accounts (commenced from 1 July 2017) are counted towards the transfer
balance cap when they commence.
If the total amount in your pension account(s) grows over
time through investment earnings to more than $1.6m, you will not exceed your
cap. If the amount in your pension account(s) goes down over time, you cannot
‘top it up’ if you have already used your cap. If you exceed your transfer
balance cap, you may have to remove the excess from one or more retirement
phase income streams, and pay tax on the notional earnings related to that
excess.
Credits to a Transfer Balance
Account (TBA):
·
If in receipt of a pension at 30 June 2017, or
start a new pension after 30 June 2017
·
If in receipt of a reversionary pension at 30
June 2017, or start to receive a reversionary pension after 30 June 2017
·
Notional earnings that accrue on amounts above
the TBC
Debits to a TBA:
·
If you commute a pension to a lump sum – value
of the lump sum is debited from the TBA
·
If you make contribution under structured
settlement or orders for personal injury rules
·
If a loss to pension capital occurs that is a
result of fraud or dishonestly and an individual has been convicted
·
If there is a payment split that reduced pension
capital
·
Clawback of certain contributions under
bankruptcy
The following are not debits:
·
Pension payments
·
Investment losses
For Example:
· Alice has a TRIS on 1 July 2017 paid from an
SNSF - $1m
·
On 1 August 2017 Alice retires and the TRIS
converts to an ABP - $950,000 on 1 August 2017
·
On 1 February 2018, Alice’s ABP (by this stage
$600,000) is subject to a payment split
·
What does this mean for Alice’s TBA?
o
On 1 July 2017
o
On 1 August 2017 + 950,000 (CR)
o
On 1 February 2018 – 500,000 (DR)
o
On 1 May 2018 – 600,000 (DR)
·
So Alice’s TBA is now negative $150,000
· This means Alice can commence a pension with
$1.75m without exceeding his transfer balance cap
