Important changes to the Transfer Balance Cap (TBC)

The ATO recently announced the indexation of the General Transfer Balance Cap (TBC) to $1.7 million which will occur on 1 July 2021. As the ATO indicated, once indexation of the general transfer balance occurs, no single TBC will apply to all individuals. Instead, individuals will have a personal TBC somewhere between $1.6 and $1.7 million.

What is the transfer balance cap?

The TBC is a cap on the lifetime limit on the total amount that can be transferred into retirement phase income streams. The current cap is $1.6 million and applies to all of the individual’s superannuation funds, which they can view in ATO online.

How will indexation affect me?

Individuals who start their first retirement phase income stream on or after 1 July 2021, will have a TBC of $1.7 million. Those who commenced a retirement phase income stream prior to this will need to calculate their own TBC.

Anyone who has already met their current TBC of $1.6 million will not be entitled to indexation. Hence, their TBC will remain at $1.6 million. Individuals who have started a retirement phase income stream, but have not met their current cap, will be entitled to indexation on a proportional basis.

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