The latest consumer price index (CPI) figures released yesterday indicate the general transfer balance cap (TBC) is almost certain to be set at $2 million effective from 1 July 2025.
“The CPI figures came out yesterday and they came in at 139.1. It needs to be 137.4 for the December quarter for the transfer balance cap to [increase] to $2 million in July. So that means we’re pretty much locked in to a [general] transfer balance cap of $2 million from 1 July next year,” Colonial First State head of technical Craig Day told delegates at The Tax Institute National Superannuation Conference held in Sydney today.
Day acknowledged there is a possibility this TBC rise may not happen, but noted the chances of this scenario manifesting were very remote.
“[The increase in the general TBC will occur] unless we get deflation of 1.22 per cent in the next quarter because it is always the December quarter that we use to index it,” he said.
“Now think about that. That’s 1.22 per cent in that one quarter. That’s a deflationary rate annualised to be almost 5 per cent. That [would only likely happen in the occurrence of] a COVID event and I don’t really think we’re going to get that.”
According to Day, the CPI movement is unlikely to be high enough to push the general TBC above $2 million either.
“In terms of could it go to $2.1 million? [For this to happen] we’d actually need the CPI figure to be 144.4, which would be a 3.81 increase in the next quarter. That’s a CPI growth rate of about 15 per cent annualised,” he recognised.
“God help us all with our mortgages if we end up in that sort of inflationary environment.
“So what I’m saying to you is we’re pretty much locked in for a [general] transfer balance cap of $2 million from 1 July next year.”
