Excess transfer balance
This information is for people who are receiving or may start receiving:
- one or more retirement phase account-based income streams (where the total value exceeds your personal transfer balance cap)
- a combination of one or more retirement phase account-based income streams and capped defined benefit income streams where the combined value exceeds your personal transfer balance cap.
Generally, when the amount you transfer into retirement phase exceeds your personal transfer balance cap you will have an 'excess transfer balance' at the end of a particular day.
Your excess transfer balance is the sum of:
- the amount that exceeds your personal transfer balance cap, and
- the earnings on the excess amount.
If you exceed your personal transfer balance cap you will have an excess transfer balance and will need to:
- remove the excess by commuting the excess transfer balance, and
- pay excess transfer balance tax.
We may also send you an excess transfer balance determination which will set out the amount you need to commute. This will include a default commutation notice. After the excess is removed, you will be issued with an excess transfer balance tax assessment.
Taking extra pension payments (or a larger pension payment) doesn't create a debit in your transfer balance account and won't rectify your excess.
You need to commute the excess transfer balance amount from retirement phase as soon as possible. This will limit the amount of excess transfer balance tax that you will be liable to pay.
You do this by commuting some or all of the value of your income stream:
- into a lump sum, or
- you can choose to keep the commuted amount in accumulation phase (unless you are commuting a death benefit income stream).
When you receive a superannuation death benefit as a lump sum, it:
- must be taken out of the superannuation system
- cannot be left in an accumulation phase account.
You can commute your excess transfer balance as soon as you are aware you are in excess, even if we haven't sent you an excess transfer balance determination. If you do this, you will need to calculate the earnings on the excess amount yourself. The sooner you do this the less excess transfer balance tax you will need to pay.
Once you have removed the excess transfer balance, you will be sent a notice of assessment showing the amount of excess transfer balance tax you will need to pay.
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