The general transfer balance cap (TBC) will remain at $1.9 million as inflation has not reached the level to push it to $2 million, but a possible increase in contribution caps will push down non-concessional contribution (NCC) bring-forward thresholds, a technical specialist has said.
Colonial First State technical services executive director Craig Day noted the general TBC was indexed each year according to the consumer price index (CPI) figure for the December quarter of the previous year and it had not increased enough to lift that figure.
“The December quarter figure out today of 136.1 is insufficient for [the general] TBC to increase to $2 million and will therefore stay at $1.9 million. [The CPI figure] would needed to have been 137.5 for an increase,” Day told selfmanagedsuper.
“Concessional contributions are indexed by average weekly ordinary time earnings (AWOTE), which has not been released yet.
“However, based on the June AWOTE figure, the December figure only needs to increase by 0.06 per cent over the six months to the end of December for the concessional cap to be indexed to $30,000 on 1 July 2024. So it is probably likely given the increase to the minimum wage and other wage pressures building.”
As a result of this change, he said the NCC cap, which is not indexed but is four times the concessional contributions cap, would increase to $120,000 and allow $360,000 to be contributed under the bring-forward rules.
However, he noted the static nature of the TBC and the increase in the NCC cap would push down the NCC bring-forward cap thresholds in the next financial year.
“This is because NCC bring-forward thresholds are calculated as TBC less a multiple of the standard NCC,” he said.
“For example, the lower threshold is TBC less two times the standard NCC, which would be $1.9 million minus $240,000 for a threshold of $1.66 million or a reduction of $20,000.”
He added the reduction in thresholds would apply to all bring-forward periods where a fund’s members’ total super balance was below $1.9 million and added further confusion to the issue of superannuation thresholds.
“During consultation back in 2016 for 1 July 2017 changes, industry feedback was not to index the different caps by different factors as it could result in this kind of outcome,” he said.
“Unfortunately, they didn’t take that feedback on and therefore we are left with this kind of outcome that makes the system more complicated.”
