Trustees and advisers must understand indexation of the general transfer balance cap (TBC) will not affect all SMSFs in the same way and may result in increased complexity for some, the ATO has said.
In preparation for the expected indexation of the general TBC on 1 July, ATO superannuation director Helen Morgan said trustees and SMSF advisers should not assume the change would automatically result in an individual’s personal TBC being indexed to $1.7 million.
“There’s no doubt that the indexation of the general TBC will make some things more complex for some individuals,” Morgan said today during an ATO webinar.
“For individuals, their agents and financial planners, we suggest you should understand the indexation of the general TBC won’t always mean an individual’s personal TBC will be indexed to $1.7 million.
“Some individuals will not have their cap indexed and some will only have their cap increased by a small amount.”
She noted that in the case of funds with members that had already started a pension and still had accumulation-phase assets or were likely to be eligible for a death benefit income stream in the near future, checking whether the member was entitled to have their personal TBC indexed was especially important.
“We also suggest that you consider reviewing the events which make up an individual’s transfer balance account and discuss any concerns with the fund,” she added.
“Understand the impact of any pending reversionary income stream credits which may impact their highest-ever balance between now and the end of the day on 30 June 2021.
“Make allowances for any other events, especially credit events which may occur between now and 1 July 2021 which have not yet been reported to us, and, especially if the individual is a member of an SMSF, may not be reported to us until sometime after 1 July 2021.”
