A superannuation technical specialist has reminded practitioners of the need to fully ascertain the correct transfer balance cap (TBC) of clients, noting the indexation that has taken place since 2021 has created hundreds of personal caps.
Industry consultant Julie Steed stated superannuation had a “strange scenario” where some thresholds were indexed to the consumer price index, including a fund member’s transfer balance cap, which was set at $1.6 million on 1 July 2017 as part of a range of reforms, but has subsequently been indexed four times since then.
“From 1 July 2026, the general TBC has increased to $2.1 million, up from $2 million in the previous financial year, because it is indexed to inflation,” Steed told an Institute of Financial Professionals Australia webinar today.
“This means there are now 501 personal TBCs a fund member could have, so I cannot stress how important it is to actually use a client’s MyGov information.
“At this time of the year, things are usually reasonably accurate and the tools the ATO provides for clients to use and give you information from their MyGov account are really valuable. Those who use platforms will also have go-to guides that can really help clients as well.
“These actions are very important with all the indexation we have now had and many of you will have clients who will all have completely different general TBCs.”
She flagged the indexation of the general TBC also has an impact on the defined benefit income cap, which is measured as the general TBC divided by 16.
“Given that has increased from 1 July this year from $125,000 to $131,250, that figure may be really important for clients with legacy pensions in SMSFs,” she said.
“It can be a real decisive factor as to whether to take advantage of the pension amnesty, which they have advantage of until 7 December 2029.
“For every financial year to date, it may have been appropriate for your clients not to have used the pension amnesty and blow up their legacy pension, but it is worth reconsidering every year because the amount of pay-as-you-go tax they pay if they have large benefits can change dramatically.”
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason