ATO, Tax

ATO confirms TSB for Div 296 tax

ATO Total superannuation balance Division 296 NALE CGT Transfer balance cap

The redefinition of a person’s total super balance as to the implementation of the $3 million soft cap has been confirmed by the ATO.

The ATO has confirmed how the redefinition of an individual’s total super balance (TSB) for the purposes of the proposed new Division 296 tax will be applied.

“An individual’s total super balance will be calculated from the sum of the total super balance values of each of their superannuation interests and that total super balance value will be determined using a method or value prescribed in the regulations for the withdrawal benefit,” ATO superannuation and employer obligations assistant commissioner Peta Lonergan told attendees of the Institute of Financial Professionals Australia 2024 Annual Conference recently held in Melbourne.

Lonergan also revealed additional detail on the calculation, representing a modification to the current framework.

“Now the TSB changes will remove the link to the transfer balance cap and it will apply to working out an indivdual’s TSB from 30 June 2025 onwards,” she said.

According to Lonergan, the regulator is currently making preparations to make the implementation of the new measure as easy as possible for superannuants.

“To minimise the impact on funds and members, we are looking at the most cost-effective way to ensure we have the necessary data to administer this calculation. So that [will mean] leveraging existing reporting requirements where possible,” she revealed.

“The ATO is considering the administrative options for the measure at the moment and we will be consulting with key external stakeholders once the policy parameters are finalised.”

During her presentation, she took the opportunity to also inform practitioners as to the current status of the non-arm’s-length expenditure (NALE) rules.

“I did want to give you a quick update about the draft Taxation Determination 2023/1, [which] outlines our view about how NALE and CGT (capital gains tax) interact,” she said.

“We did receive a fair number of responses during the consultation period and we’re still working through that feedback. We do expect to issue a final tax determination soon so keep an eye out for that.”

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