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  • Transfer balance account

    The transfer balance account is a record of the events that count towards your personal transfer balance cap.

    The balance of your transfer balance account determines whether you have exceeded your personal transfer balance cap at the end of any given day.

    You will only have one transfer balance account for all of your retirement phase interests which will remain active until your death.

    Special rules apply for child recipients of a death benefit income stream.

    Your transfer balance account commences on either:

    • the day you first receive a retirement phase income stream after 1 July 2017
    • 1 July 2017, if you were already receiving a retirement phase income stream on 30 June 2017.

    You can make multiple transfers into the retirement phase, provided you have available personal cap space. Your available personal cap space will increase proportionally with indexation. If at any time you reach or exceed your personal transfer balance cap, you will not be entitled to indexation.

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    Transfer balance cap

    The transfer balance cap is a limit on how much superannuation can be transferred from your accumulation superannuation account to a tax-free ‘retirement phase’ account.

    The general transfer balance cap is currently $1.6 million and all individuals have a personal transfer balance cap of $1.6 million.

    When the general transfer balance cap is indexed to $1.7 million there will be no single cap that applies to all individuals. Every individual will have their own personal transfer balance cap, somewhere between $1.6 and $1.7 million, depending on their circumstances.

    If you exceed your personal transfer balance cap, you may have to:

    • commute (that is, convert a portion of your retirement phase income stream into a lump sum) the excess from one or more retirement phase income streams
    • pay tax on the notional earnings related to that excess.

    If the amount in your retirement phase account grows over time (through investment earnings) to more than your personal transfer balance cap, you won’t exceed your cap. If the amount in your retirement phase account goes down over time, you can’t 'top it up' if you have already used all of your personal cap space.

    Different tax rules apply to capped defined benefit income streams, as you usually can’t transfer or commute excess amounts from these income streams.

    Example

    Richard started a pension valued at $1.6 million on 1 July 2017. This uses up all his personal transfer balance cap.

    By 1 July 2019, the value of that pension account had grown to $2.0 million. As this growth is due to investment earnings, Richard has not exceeded his personal transfer balance cap.

    On 30 June 2020, the value of that pension account had fallen to $1.0 million due to the impact of COVID-19 on the assets supporting the pension. Richard cannot 'top up' his pension account with money he holds in his accumulation account because he has already used all his personal cap space.

    End of example

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      Last modified: 04 May 2020QC 54354