Advisers can address TBC uncertainty

personal TBC estimate

Super fund members will not have certainty around the personal TBC until well after 1 July but financial advisers can help them calculate an estimate.

Superannuation members have been reminded their personal transfer balance cap (TBC) will not be immediately available to view after the 1 July this year but advisers can help them calculate an estimate for the purposes of deciding when to start a retirement phase pension.

BT Financial Group technical consultant Michael Tran acknowledged the ATO will not directly provide revised caps for individuals which result from the proposed indexation of the general TBC on 1 July before that date, and fund members may have to wait some weeks for the final figure.

“The ATO do provide the cap space but the issue with this is they are not going to show your clients what the index cap will be from 1 July 2023 until after the fact,” Tran explained during an adviser briefing today.

“So, until after 1 July 2023, you won’t see what the index cap will be and you probably will have to wait about a month because there is reporting that super funds have to send to the ATO which then has to reflect that reporting onto their systems before reflecting it on the mygov website.

“The ATO is not going to provide you with that number until they are sure everything is reflected and in some instances it may not even reflect everything, particularly in the context of SMSFs because they have a longer duration in their reporting requirements.”

Tran noted from 1 July all SMSFs will need to report TBC events within 28 days of the end of the quarter while retail funds will continue to report TBC events within 10 business days and some of these are likely to occur right up to the end of the financial year.

As a result, financial advisers should be working with clients to help them calculate what their likely revised personal TBC will be, particularly if they are considering starting a pension in the current or following financial year, he said.

“The purpose of this information is to help you understand or plan with the client what that cap may be as it will help answer the question of whether or not we delay starting a pension.

“You can’t really answer that question unless you know what the index cap will be from 1 July, but you need to know that before 1 July to help you plan out and answer some questions that the client will have between now and then.”

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