Transfer balance cap for retirement phase accounts

Transfer balance cap for retirement phase accounts


There will be a new transfer balance cap for retirement phase accounts as of 1 July 2017.

Individuals may have an excess transfer balance and have to pay excess transfer balance tax if they exceed their transfer balance cap.

These changes may affect retirees who receive:
– One or more account-based income streams
– A combination of one or more account-based income streams and capped defined benefit income streams.

Your excess transfer balance can be calculated by adding the amount that exceeds the transfer balance cap and the earnings on the excess amount.

The earnings individuals make on their excess transfer balance are notional earnings, because determining actual earnings on a specific portion of overall assets can be difficult. The earnings are compounded daily, that is, each day the earnings are calculated and credited to the transfer balance account, thus increasing the amount that excess transfer balance earnings.

You may be liable to pay tax from the period you start to have an excess transfer balance until the balance account is no longer in excess. Excess transfer balance tax cannot be paid by your super provider. For an excess transfer balance in 2017-18, the tax rate is set at 15 per cent.

From 1 July 2018, the tax rate will be 15 per cent for the first time you have an excess transfer balance but raises to 30 per cent for any subsequent excess transfer balances.

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If you believe the matters discussed above are relevant to your business, please contact Darren Smith of our office to discuss further.


Darren is a Chartered Accountant with extensive experience, including working in the big 4 and medium sized firms before becoming a partner of a city based firm in 2000.

He has gained much experience and has extensive knowledge in providing business and taxation advice, superannuation planning, negotiation of sales and acquisitions of businesses and property development. His client base covers a wide range of industry groups.

Darren works with business owners to grow their businesses and create personal wealth within and outside of their business.


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