Increase to Transfer Balance Caps

Increase to Transfer Balance Caps

Based on the current rules, the effect of the December 2020’s quarter CPI increase will be to increase the general transfer balance cap from $1.6M to $1.7m from 1 July 2021. Confusion will be the primary result.

Only members who have not yet commenced a pension will be eligible for the new $1.7m TBC.

For a member whose highest transfer balance account has been recorded at $1.6m, or more, the increase will not be passed on. Their TBC will remain at $1.6M.

For a member who has registered $800K (half their $1.6m TBC), their new TBC will be $1.65M. i.e. They will receive half the increase as they have used half their entitlement.

This means that unique, member specific transfer balance caps will be the norm.

Currently, the only way that a member’s TBA data can be accessed is via the member direct and by the members personal tax agent (not the tax agent for their SMSF). There is no ability for this data to be fed to any purpose-built software outside of the ATO so there is no simple way for advisers and administrators to keep on top of the problem. It’s bad enough now, it will be much worse come July 1. It’s past time for Treasury to release the necessary funding for the ATO to provide this facility.