SMSF specialist service provider Heffron has launched a calculator to assist advisers and accountants in monitoring their clients’ personal transfer balance caps (TBC) in preparation for the introduction of indexation to the superannuation system.
TBC indexation is set to be implemented on 1 July 2021 and marks the first adjustment to the prescribed superannuation threshold since its inception on 1 July 2017.
In dollar terms, the TBC is set to be increased from its existing level of $1.6 million to $1.7 million at that date. However, it will be applied on a proportionate basis, which means not every superannuant will be entitled to the full $100,000 increase – a point Heffron managing director Meg Heffron noted.
“People will have their own personal transfer balance caps, which could be $1.6 million, $1.7 million or somewhere in between,” Heffron said.
It has been determined the ATO will be responsible for calculating an individual’s personal TBC over time once indexation has taken effect, however, this will be subject to the reporting of actual transactions involving an SMSF in retirement income phase, such as when a pension is either commenced or commuted.
From a practical perspective, it means accountants and advisers will never be provided with real-time TBC data should they rely on the ATO’s monitoring of people’s personal caps, Heffron pointed out.
The Heffron TBC calculator will allow practitioners to navigate this characteristic of the system as it will take into account any relevant transactions that have already been executed, or are about to be executed, up to 30 June 2021.
The calculator also incorporates functionality that will provide accountants and advisers with prompts regarding the entry of less common situations such as inheriting a pension from a deceased spouse.
When all of the data is entered into it, the calculator will determine an SMSF member’s personal TBC as at 30 June 2021 and, in turn, the amount of indexation to which they will be entitled.
“It’s quick, easy to use and absolutely accurate. For accountants and advisers, it provides certainty around how this complicated legislation works and makes it easy to get a key piece of information that is vital for advising clients now,” Heffron said.
The indexation of the TBC and the contributions caps is a topic that will be discussed in depth at SMSFPD Digital 2021 to be held on 24 and 25 May. To find out more and register for the event, please visit https://web.cvent.com/event/1432890d-987b-46a3-970a-5d8043c4258f/summary?RefId=Summary.
