Introduce a $1.6 million superannuation transfer balance cap
In the 2016-17 Budget it was announced that from 1 July 2017 the total amount of superannuation that can be transferred into retirement phase will be capped at $1.6 million.
The cap will be indexed in $100,000 increments in line with the consumer price index (CPI).
Superannuation savings accumulated in excess of the cap can remain in a superannuation account in accumulation phase, where the earnings will continue to be taxed at the concessional rate of 15 per cent.
An apportionment approach will be used to determine how much cap space an individual has available. For example, if an individual has previously used 75 per cent of their cap they will have access to 25% of the current (indexed) cap.
Subsequent earnings on balances transferred into retirement phase will not be restricted.
Individuals with accounts already in retirement phase before 1 July 2017 with a balance in excess of $1.6 million will need to either:
- transfer the excess amount to a superannuation account in accumulation phase; or
- withdraw the excess amount from their account.
Individuals who breach the cap will be subject to additional tax, similar to the tax treatment that applies to excess non-concessional contributions.
Legislation and supporting material
- Legislation is currently being developed for this measure.
Find out more
In the 2016-17 Budget it was announced that from 1 July 2017 the total amount of superannuation that can be transferred into a tax-free retirement account will be capped at $1.6 million.