General transfer balance cap will be indexed on 1 July 2025
Indexation of the general transfer balance cap (‘TBC’) will occur on 1 July 2025. This cap will increase by $100,000 from $1.9 million to $2 million.
The general TBC amount is used for a number of purposes, including to determine the total capital amount that can be transferred to the retirement (pension) phase, and to determine eligibility for making non-concessional contributions.
This increase has flow through impacts for individuals who have started a retirement phase pension, as they will be entitled to an increase to their personal TBC if they have not previously been at, or exceeded, their cap.
Individuals starting a pension for the first time on or after 1 July 2025 will be entitled to a personal TBC of $2 million.
The ATO will calculate an individual’s personal TBC based on the information reported to and processed by the ATO. To help individuals have a clear understanding of their position, the ATO encourages funds to report all ‘TBC events’ when they occur and as early as possible before the 1 July 2025 indexation start date.
Indexation of the general TBC also has flow through consequences for the Total Super Balance (‘TSB’). The TSB influences an individual’s non-concessional contributions cap, non-concessional bring forward arrangement, and eligibility for spouse tax offset and co-contributions.
Quarterly TBAR lodgement reminder
SMSFs must report certain events that affect a member’s transfer balance account (‘TBA’) quarterly using transfer balance account reporting (‘TBAR’).
These events must be reported even if the member’s total superannuation balance is less than $1 million.
TBA events include starting or commuting a retirement phase pension.
TBARs for the March quarter are due on 28 April 2025 and SMSFs that do not report on time may be subject to compliance action and penalties, and the member’s TBA may be adversely affected.
Note that SMSFs are not required to lodge if there were no TBA events during the quarter.
Stay Compliant and Avoid ATO Scrutiny
At Omnis our SMSF team is highly skilled at navigating the complexities of SMSF regulations to help our clients achieve financial security and compliance. Contact us in West Perth on 08 9380 3555.
