Transfer balance account

How to manage your superannuation account transfers when you retire.

On this page

• About the transfer balance account
• Transfer balance cap
• Difference between your cap and super balance
• Managing your transfer balance account

About the 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 both:

• whether you have exceeded your personal transfer balance cap at the end of a particular day
• if your personal transfer balance cap will be indexed.

You will only have one transfer balance account for all your retirement phase interests. It 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 if you have available personal cap space. If at any time you reach or exceed your personal transfer balance cap, you will not be entitled to indexation of the transfer balance cap.

Transfer balance cap

The transfer balance cap applies from 1 July 2017. It is a lifetime limit on the total amount of capital that individuals can transfer into the retirement phase to support their super income streams.

In 2017–18, the general transfer balance cap was $1.6 million. It is subject to indexation in $100,000 increments on an annual basis in line with the consumer price index (CPI), rounded down to the nearest $100,000.

An individual's personal transfer balance cap equals the general transfer balance cap at the time they begin their first income stream. It may be modified by proportional indexation of their cap, depending on whether they have available personal cap space.

Refer to Transfer balance cap for current rates for both the general transfer balance cap and defined benefit income cap.

Personal transfer balance cap

When you commence your first income stream, your personal transfer balance cap will equal the general transfer balance cap for that financial year.

Before indexation on 1 July 2021, all individuals with a transfer balance account had a personal transfer balance cap of $1.6 million. After indexation on 1 July 2021, individual personal caps were between $1.6 and $1.7 million.

On 1 July 2023 the general transfer balance cap will index to $1.9 million, an increase of $200,000. If you:

• commence your first income stream on or after 1 July 2023, your personal cap will be $1.9 million
• have an income stream prior to 1 July 2023, your personal cap will be between $1.6 and $1.9 million.

The amount of indexation you are entitled to will be calculated proportionally based on your available cap space. If you meet or exceed your cap at any time, you will not be entitled to indexation of your personal cap.

For more information, see how to calculate your indexation increment.

Exceeding your personal transfer balance cap

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

• commute the excess from one or more retirement phase income streams, by either   
  • converting a portion of your retirement phase income stream into a lump sum payment
  • commuting the amount in excess back into accumulation phase (unless it is a death benefit income stream)
   
• 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. For more information, see LCR 2016/9 Superannuation reform: transfer balance cap.

Difference between your cap and super balance

Your transfer balance account and total superannuation balance are calculated differently and are not related.

The general transfer balance cap is a limit on the amount of superannuation that can be transferred into the retirement phase.

A total superannuation balance is calculated at a particular time by adding together the value of all your superannuation interests less any structured settlements. It is relevant when working out your eligibility for the contribution caps, co-contributions and tax offsets.

Managing your transfer balance account

Transfers into and out of retirement phase are referred to as credit or debit events. Your transfer balance account is calculated by keeping track of these events. It is used to determine whether you have exceeded your personal transfer balance cap.

All of your retirement phase income streams are taken into consideration, including capped defined benefit income streams and market-linked pensions.

The value of your superannuation interests is calculated by your super fund and reported to us. If you believe the value reported is incorrect, you should contact your super fund.

You can view your personal transfer balance cap, available cap space and transfer balance account transactions online through your myGov account linked to the ATO.

Credits to your account

Generally, a credit arises in your transfer balance account when you become the recipient of a superannuation income stream that is in retirement phase.

The following events will cause a credit to your transfer balance account:

• superannuation income streams that were in existence just before 1 July 2017 and you continue to receive them after that date – including both reversionary and non-reversionary death benefit income streams
• new superannuation income streams that commenced after 1 July 2017 – including both reversionary and non-reversionary death benefit income streams
• when a transition to retirement income stream starts to be in retirement phase
• repayments from limited recourse borrowing arrangements
• excess transfer balance earnings.

These credits increase your transfer balance account and reduce your available personal cap space.

Superannuation income streams

An income stream is a series of periodic benefit payments to a member. This includes both reversionary and non-reversionary death benefit income streams and can be either:

• account-based income streams (the amount supporting the income stream is allocated to a member's account)
• non-account based income streams, including capped defined benefit income streams (these are income streams that don't have an identifiable account balance in the member's name. The member receives regular payments, usually guaranteed for life).

Account-based income stream

If you were receiving an account-based superannuation income stream just before 1 July 2017, and you continued to receive it after that date, your fund will have reported the value on 30 June 2017. The value includes all the superannuation interests that support the income stream in retirement phase that you were receiving at that time.

If you started an income stream after 1 July 2017, your fund will report the commencement value of that superannuation income stream. This includes death benefit incomes streams and market-linked pensions.

You may choose to reduce your working hours and start a transition to retirement income stream (TRIS). TRIS that are in retirement phase are also included in the transfer balance account. Your TRIS will start to count towards your transfer balance cap on the day it becomes a retirement phase income stream, based on its value on that day. A TRIS isn't in retirement phase until the member meets a condition of release.

For further information on when a TRIS is in the retirement phase, see GN 2019/1 Changes to transition-to-retirement income streams.

Capped defined benefit income streams

Capped defined benefit income streams are treated differently. This is because you usually can’t commute these income streams, except in limited circumstances.

Capped defined benefit income streams are:

• lifetime pensions, regardless of when they commence
• lifetime annuities that existed just before 1 July 2017
• life expectancy pensions and annuities that existed just before 1 July 2017
• market-linked pensions and annuities that existed just before 1 July 2017.

The modified value of a capped defined benefit income stream is referred to as the 'special value'. Your superannuation provider will calculate the 'special value' and report this information to us.

A capped defined benefit income stream will not give rise to an excess transfer balance by itself. However, you may have an excess transfer balance when you have a combination of both an account-based income stream and a capped defined benefit income stream.

If the combined value of the account-based income stream and the special value of the capped defined benefit income stream is in excess of your personal transfer balance cap, you will be required to commute the excess transfer balance from the account-based income stream.

Reversionary income streams

The value of your reversionary superannuation income stream is calculated at the time you first become entitled to payments from the income stream. This is usually the date of death of the original member. A credit arises in your transfer balance account for this value, 12 months after the date of death. However, your fund will report this to us once you become eligible to receive it.

Limited recourse borrowing arrangements

A credit will arise in your transfer balance account in relation to a payment made by a superannuation provider under a limited recourse borrowing arrangement (LRBA) that was entered into on or after 1 July 2017, where:

• the payment results in an increase in the value of your superannuation interest that supports your superannuation income stream that is in the retirement phase, and
• your superannuation interest is in a self-managed super fund (or another complying super fund with less than 7 members).

For further information on when an LRBA arises as a credit in your transfer balance account, see LCR 2016/9 Superannuation reform: transfer balance cap.

Excess transfer balance earnings

If you have exceeded your personal transfer balance cap, we will credit your transfer balance account with the earnings that accrue on your excess transfer balance amounts.

We will advise you of the amount credited to your excess transfer balance account when we issue an excess transfer balance determination.

If you have not received a determination and want to rectify your excess prior to receiving a determination, you need to ensure that you remove the correct amount of earnings. The earnings are calculated up to the date that the excess was removed from retirement phase.

Excess transfer balance earnings will continue to accrue until your transfer balance is equal to or less than your personal transfer balance cap. You will pay excess transfer balance tax on those earnings.

Debits to your account

Debits to your transfer balance account reduce your transfer balance and increase your available cap space.

Pension payments and investment losses from your retirement phase income streams are not commutations and they are not debits to your transfer balance account.

Events that cause your account to be debited include:

• commutations
• structured settlement contributions
• when your defined benefit lifetime pension or annuity is reduced due to a change in your circumstances
• losses due to fraud and bankruptcy
• family law payment splits
• superannuation income streams that                  
  • cease to be in the retirement phase
  • fail to comply with the standards 
   
• non-commutable excess transfer balance amounts.

Commutations

Your transfer balance account is most commonly debited when you fully or partially commute a retirement phase income stream. This is usually from an account-based income stream. A commutation is the exchange of part or all of the value of your income stream for a lump sum. The lump sum can either be:

• paid out of the superannuation system
• retained in an accumulation phase account (unless it is a death benefit income stream).

When you receive a superannuation death benefit as a lump sum this must be taken out of the superannuation system and not left in an accumulation phase account.

You can choose to request a commutation from your superannuation provider if you are in excess of your personal transfer balance cap.

If you choose not to commute the excess, we will issue a commutation authority to your superannuation provider to have the excess removed from the retirement phase.

If a superannuation income stream is fully or partially commuted, your transfer balance account is debited by the value of the commutation. The debit arises when you receive the lump sum, not at the time you instruct the superannuation provider to commute the income stream.

Unless you are commuting a superannuation death benefit income stream, you can choose to transfer the lump sum to an accumulation account or withdraw it from the superannuation system.

Structured settlement contributions

A structured settlement is a payment for a personal injury you have suffered. A corresponding debit will arise in your transfer balance account to offset the credit that occurs when you receive and contribute a structured settlement amount to superannuation.

A debit arises in your transfer balance account when you make the contribution of the structured settlement amount or at the time that you first have a transfer balance account, whichever is later.

For the debit to arise in your transfer balance account, the structured settlement contribution must be made to a super fund within 90 days of being received, or the structured settlement order coming into effect, whichever is later.

You must notify your superannuation provider that the contribution is being made under this exemption before, or when, making the contribution to enable them to treat it appropriately and report it correctly to us.

Slightly different rules apply to structured settlements received before 10 May 2006. These rules remove the requirements that you make the contribution within 90 days and notify your superannuation provider. You will need to report these to us via a Transfer balance event notification form.

When structured settlement contributions were made before 1 July 2017, the debit for the structured settlement contribution you have made will include any investment growth that had occurred on the structured settlement contributions.

Defined benefit lifetime pension or annuity reduced

The rules of your super fund may specify that your lifetime pension or annuity reduces due to a change in your circumstances. These reductions occur mainly with public sector superannuation schemes. For example:

• when a reversionary defined benefit pension is paid to a surviving spouse or a beneficiary. In some cases, the first payment is the full amount of the payment that was made to the deceased, whereas the second and all subsequent payments are a proportion of the full entitlement. As a result, the annualised payment is based on an inflated figure
• when a reversionary defined benefit pension paid to a surviving spouse is calculated by reference to the deceased’s dependent children. In such cases, the surviving spouse’s entitlement can be reduced as the children cease being dependent (generally at 18 or 25 years old depending on their circumstances).

The rules of your fund will determine if you are eligible for this debit. You will need to contact your fund to know if this debit will apply to you.

The value of the debit is the special value of your lifetime pension or annuity just before the reduction in value less the special value of your lifetime pension or annuity just after the reduction in value.

Failure to comply with pension or annuity standards

If your super fund fails to comply with the rules or standards for your income stream, that income stream may cease to meet the definition of a 'superannuation income stream'. This means it will no longer be eligible for the earnings tax exemption.

Failure to comply with a commutation authority

If your super fund fails to comply with a commutation authority, the relevant income stream will cease to be in the retirement phase. The income stream will cease to be in the retirement phase from the start of the income year that the fund failed to comply with the commutation authority.

This means it will no longer be eligible for the earnings tax exemption for that income year. A debit will arise in your transfer balance account equal to the value of your income stream at the end of the period specified in the commutation authority.

Non-commutable excess transfer balance

In some situations, you may have an excess transfer balance and no remaining retirement phase income streams that you can use to commute the excess from. This becomes an amount of excess transfer balance that you can't commute after being issued with an excess transfer balance determination.

You may have a non-commutable excess transfer balance because the only retirement phase superannuation income streams you have are capped defined benefit income streams or because you are no longer a retirement phase recipient of any superannuation income stream.

If your superannuation provider notifies us that you have insufficient value to commute to resolve your excess transfer balance and the account is closed, then you will have a non-commutable excess transfer balance and we will notify you in writing. The debit arises in your transfer balance account when we issue the notice.

The above debits will be reported to us by your superannuation provider using a Transfer balance account report (TBAR).

Replenishment debits

There are a limited number of events that may result in an individual losing some or all of the value in their superannuation interests, including:

• a family law payment split
• a debit event from fraud, dishonesty or bankruptcy

These debits are required to be reported to us by you on a Transfer balance event notification (TBEN) form.

Family law split

Superannuation interests may be split as part of the division of property following a divorce or relationship breakdown. One party (the member spouse) will be required to provide a proportion of their retirement phase superannuation interests to the other party (the non-member spouse).

For either spouse, the debit arises either when the payment split becomes operative (under the Family Law Act 1975) or when they start to have a transfer balance account (whichever is later).

A payment split may involve the member spouse either:

• commuting part of their superannuation income stream into a lump sum, which is then paid to the non-member spouse. (This will be reported as a commutation by your superannuation provider and you don't need to complete a TBEN form to notify us of this event)
• retaining complete ownership of their superannuation interest but having a portion of each payment from their retirement phase income stream directed to the non-member spouse. One spouse must notify us in writing on a TBEN form. The notifying spouse needs to contact the member’s super fund before completing the TBEN form, to ensure they provide the correct information to us.

For more information on family payment splits, see Super and relationship breakdowns.

Rolling over your pension

When you roll over your retirement phase income stream, you will get:

• a debit in your transfer balance account when you commute the income stream in your old super fund, and
• a credit in your transfer balance account when you start a retirement phase income stream in your new super fund.

These debit and credit events will be reported to us by your superannuation providers.

You need to ensure that the value of the superannuation income stream you start does not result in you exceeding your personal transfer balance cap.

In some instances, the value of the debit when you commute your retirement phase income stream will not equal the value of the pension you start with the same assets. For example, if there has been a growth or loss in the value of the assets while they were not in retirement phase. When you start a new pension be aware of your available personal transfer balance cap space.

For more information, see:

• LCR 2016/9 Superannuation reform: transfer balance cap
• LCR 2016/10 Superannuation reform: capped defined benefit income streams – non-commutable, lifetime pensions and lifetime annuities
• LCR 2017/1 Superannuation reform: capped defined benefit income streams – pensions or annuities paid from non-commutable, life expectancy or market-linked products

How to manage your superannuation account transfers when you retire.