ATO, Superannuation

TBC indexation set for July

TBC indexation

Indexation of the general transfer balance cap will occur on 1 July leading to a departure from a standard figure for super fund members.

The ATO has announced indexation of the general transfer balance cap (TBC) will occur on 1 July due to the latest consumer price index (CPI) exceeding the 116.9 figure required to trigger such a move.

In an update on its website, the regulator confirmed the CPI figure for the December 2020 quarter had reached 117.2, triggering indexation so that, from July, no single TBC would apply to all individuals.

“Individuals will have a personal TBC somewhere between $1.6 and $1.7 million. If an individual already has a TBC, the only place they can view their personal TBC is in ATO online services through myGov,” it said.

“We will calculate each individual’s personal TBC based on the information reported to and processed by us. If you report pre-1 July 2021 events after 1 July 2021, we will go back and recalculate the member’s personal TBC and apply that new cap to their affairs.”

It encouraged trustees to report all events that had occurred during the 2021 financial year or earlier as soon as possible in order to ensure their fund members had a thorough understanding of their TBC position.

“Indexation of the general TBC will also lead to changes in a number of other caps and limits in the super system,” it added.

In a blog post on the SMSF Alliance website following the ATO’s announcement, company principal David Busoli noted indexation would cause confusion and called for a system that enabled SMSF advisers and administrators to access members’ transfer balance account data.

“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,” Busoli said.

“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.”

In a separate update on its website, the regulator urged trustees to check their auditor’s details when completing their SMSF annual return (SAR) and to assist in its effort to prevent SMSF auditor number (SAN) misuse, ensure the information entered in their SAR aligned with the details in their SMSF independent auditor’s report.

It also stated it would be following up on its September SAN misuse mail-out with a second mail-out for the 2019 income year directed to SMSF auditors who had not responded to the regulator’s initial mail-out.

“The information auditors provide will also help us determine whether a SAR was lodged prior to audit completion. Even where the lists reveal no misreporting, auditors should still confirm this with us so we can be assured that the funds in the list received an audit,” it said.

Recently, SuperConcepts SMSF specialist Anthony Cullen noted SMSF practitioners would need to pay close attention to how TBC indexation from 2021 onwards would impact the total super balance, and concessional contribution and non-concessional contribution caps, as any changes were likely to vary each year and could not be applied universally.

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