Super Newsletter
Transfer Balance Cap –Indexed to $2m
With the release of the December CPI figures, the general transfer balance cap (TBC), (the cap that limits the total amount of super you can transfer into ‘retirement phase’) is set to increase to $2m on 1 July 2025.
What does this mean for you?
While the general cap will increase by $100,000 to $2m on 1 July 2025, not everyone will be entitled to the same increase. Your TBC will be proportionally indexed based on your highest utlisation of the TBC balance Any unused cap that you may have (expressed as a percentage) will determine your indexation entitlement. If at any stage you have fully used all of your cap, then indexation will not apply to you.
Partial commutations (lump sum withdrawals from pension accounts) do not change the calculated cap percentage.
The following table illustrates the complexity surrounding the transfer balance cap system and the confusion that can arise regarding an individual’s available TBC. The Australian Taxation Office (ATO) keeps record of your current personal TBC and this information can be accessed through your MyGov account or via your personal tax agent.
Please contact our office if you require assistance to determine your current cap entitlement.
The defined benefit income cap will consequently increase to $125,000 from 1 July 2025.
Contribution limits
The increase to the general TBC, subsequently effects what can be contributed under total super balance limitations. From 1 July 2025, those with total Superannuation balances under $2m will potentially be eligible to make non-concessional contributions, subject to satisfying other eligibility criteria.
Following the increase to the TBC, below are the expected changes to total super balance thresholds, which determine an individual’s eligibility to make non-concessional contributions (after-tax super contributions):
If during FY25 you were considering utilising the three year bring-forward of non-concessional contributions (i.e., 3 x $120,000 = $360,000) your total super balance at 30 June 2024, must be less than $1.66m to be eligible. However, from 1 July 2025 this eligibility will be assessed against a $1 76m threshold, and non-concessional contributions may be made by those with balances under $2m. Non-concessional contributions (including the bring forward rules) are available to those aged under 75 years that satisfy the total super balance requirements
Contribution cap limits to remain unchanged
While the TBC increase is linked to CPI, contributions cap increases are triggered by the growth in average weekly ordinary time earnings (AWOTE). The latest AWOTE figures have been released confirming that that contribution caps will not be indexed in Fy26.
Division 296 tax - Will it go ahead?
The bill to introduce the Division 296 tax and impose an additional 15% tax on the proportion of earnings attributable to superannuation balances exceeding $3 million has continued to face significant challenges in progressing through the Senate.
According to the SMSF Association, after multiple delays and rescheduling of the bill for debate, the bill appears to be firmly stalled, with a strong likelihood that it’s ‘destined to lapse’ once the election is called. The Senate is scheduled to sit from 25 to 27 March and again from 6 to 15 May, however with the federal election needing to be called by 17 May, the government has a limited window to bring the bill forward for debate.
If you have any concerns or wish to discuss this further, please contact our office.
Congratulations Bec!
Bec and Paul welcomed a little boy, Henry into their family on Christmas Day! The team is looking forward to a visit to the office soon.
Bec will return to Pitchers in July.
pcamenzuli@pitcherpartners.com.au
Tracey Norris Partner e. tnorris@pitcherpartners.com.au
