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.
Don’t let decades of hard work fall short of your retirement goals. Partner with Omnis in West Perth to navigate retirement tax planning complexities and maximise your outcome.
