TBC increase not just about pensions

An industry consultant has reminded practitioners the indexation measure to be applied to the general transfer balance cap will have implications for other elements of the superannuation system as well that are unrelated to income streams.

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The general transfer balance cap will shift from $1.9 million to $2 million from 1 July and BT technical consultant Michael Tran drew attention to the link it has with other superannuation limits such as the total super balance (TSB) with reference to some specific actions available to fund members.

“The total super balance thresholds linked to the eligibility for co-contributions and the spouse contribution tax offset will also increase by $100,000 [going from $1.9 million to $2 million on 1 July],” Tran noted.

“[That means] from 1 July if a client’s TSB is greater than this figure at the most recent 30 June, which will be 30 June 2025, for the next financial year the client will not receive these benefits.

“So they won’t receive a co-contribution from the government, they won’t receive the spouse contribution tax offset in their tax return if their TSB is going to be higher than that cap.

“It actually would mean that the client would [have exceeded] their non-concessional cap as a result as well.”

Further, he took the opportunity to confirm the concessional contributions cap is not changing as its indexation measure is tied to average weekly ordinary time earnings (AWOTE) and not the consumer price index.

However, he predicted these limits would change in the near future given the AWOTE figures the Australian Bureau of Statistics published last Thursday.

“The concessional [contributions] cap will remain the same because the index number was not sufficiently large enough to cause it to increase,” he explained.

“The concessional [contributions] cap only changes when [the AWOTE statistic] reaches a multiple of 2500 and the number fell just short of that.

“However, it does look very likely that the concessional cap will increase after July 2026. So not July 2025 in terms of the next financial year, but the following financial year.”

Darin Tyson-Chan
February 26, 2025
smsmagazine.com.au