Financial advisers need to be especially careful this week if they choose to calculate a client’s personal transfer balance cap (TBC) for the purposes of starting a pension before they are updated on ATO Online Services this Friday 11 July.
“The new personal caps apply…from the 1 July, but clients can’t see them until 11 July,” Colonial First State head of technical services, Craig Day, told listeners of the latest FirstTech podcast.
On 1 July the general TBC increased from $1.9 million to $2 million. This means anyone who starts a pension on or after 1 July 2025 will have an extra $100,000 to move into the tax-free retirement phase if it is their first retirement phase income stream. However if people have commenced a pension previously they will only be entitled to a proportional increase in their personal TBC, determined by how much of their cap they have already used.
While a client’s TBC is visible in their ATO Online Services account, the regulator has previously stipulated it won’t be updated to include the new indexed level until 11 July 2025.
“What if advisers need to know you what the cap amount is, sooner than that?” Day, asked Colonial First State Senior Technical Manager, Tim Sanderson, on the recent FirstTech podcast.
In response Sanderson noted it could be possible to calculate a client’s new cap from existing information in ATO online services such as the client’s highest ever transfer balance account value and any transfer balance account transactions.
“But it is really important when you’re either relying on the cap information released by the ATO expected on 11 July, or you’re manually calculating, to ensure that all the information you’re using is up-to-date, including that any transfer balance account credits and debits have been reported and reflected,” Sanderson explained.
Further he pointed out even after 11 July, financial advisers can’t generally view a client’s ATO Online Services account.
“That’s an issue often mentioned to us by advisers, the lack of ability to directly access that information. So, as it stands at the moment, advisers may well need to get clients to directly check and confirm that information,” Sanderson suggested.
