Confusion reigns over superannuation transfer balance cap

A recent speech by the ATO’s Assistant Commissioner for Superannuation demonstrates the very practical problems with the new superannuation rules.

The $1.6 million transfer balance cap (TBC) that limits the amount you can hold in a superannuation pension requires trustees to be aware of how close they are to this limit at all times. To ensure that this cap is not breached, trustees need to report common events that may impact on a member’s pension account. Trustees should have already reported pre-existing pensions (pensions members were receiving just before 1 July 2017 that they have continued to receive and which are in retirement phase on or after 1 July 2017).

This new event-based reporting requirement is causing a few headaches with the wrong information or no information being reported. Common ‘events’ that need to be reported include:

• The start of new retirement phase pensions
• The full or partial pay-out of a pension (commutation), and
• Some limited recourse borrowing arrangements.

Some information does not need to be reported including withdrawals from accumulation accounts, standard pension payments, or investment earnings or losses made on or after 1 July 2017.

To make the reporting process work, it’s essential to keep us up to date as events occur. If you are not sure, just give us a call or drop us a line – it’s better to be sure.