The Transfer Balance Cap (TBC), initiated on 1st July 2017, was introduced with the aim of restricting the amount individuals can transfer into retirement phase pensions.
When first introduced, the General TBC was set to $1.6 Million.
However, the General Transfer Balance Cap (TBC) was subsequently raised to $1.7 million on July 1, 2021, and further increased to $1.9 million on July 1, 2023. This increase aligns with changes in the Consumer Price Index (CPI), advancing in increments of $100,000.
Notably, fluctuations in the value of funds held in retirement phase due to investment earnings, whether positive or negative, will not affect an individual’s TBC.
While understanding this information is crucial, what’s even more important to grasp is that an individual’s Personal Transfer Balance Cap (TBC) might not align with the General TBC.
An individual’s Personal Transfer Balance Cap (TBC) begins with the General TBC in the financial year when they establish their transfer balance account. Any subsequent increments in their personal cap are then adjusted in proportion to increases in the General TBC.
If an individual has an existing personal cap before a financial year when the general cap increases, they will receive only a ‘proportional amount’ of the indexation applied to the general cap.
TBC Credits and debits:
The tables below list some of the more common examples of credits and debits.
To enhance comprehension of the Transfer Balance Cap system, establishing a fundamental understanding of the relevance of both the General and Personal Transfer Balance Caps, and their interaction with an individual’s Transfer Balance Account, is crucial.
Simultaneously, we’ve illustrated how TBC credits and debits are showcased in an individual’s TBA, highlighted the essential reporting timeframes for SMSF trustees, and emphasized the information accessible to individuals through their MyGov account.