Transfer Balance Cap Explained


A transfer balance account is how the ATO track super transactions and amounts during a person’s retirement phase. The amount in your clients transfer balance account will determine whether or not they have exceeded their transfer balance cap. The limit on the amount someone can hold in retirement phase is currently (in 2017-2018) is $1.6 million.

It’s important to note that clients will begin to have a transfer balance account from the 1st of July 2017 if they are already receiving a retirement phase income stream at the end of June 2017. Otherwise, it will be on the day they first commence receiving a retirement phase income stream.

A transfer balance amount is essentially the sum of credits minus the sum of debts that are posted into the account. Credit and debit events are the only way balance changes can occur within a transfer balance account.

A change in your clients transfer balance only occurs when a credit or debit event occurs. For example, the fluctuation of investment amounts and their performance will not affect the transfer balance account. It’s also important to note that if your clients’ debts exceed theirs credits, their transfer balance account can dip into the negative.

If, prior to 1st July 2017, a super trustee is already receiving income from a superannuation income stream, the transfer balance account will begin on 1st July 2017, your client will be credited for the total value of the super interests that support the retirement phase income streams you are receiving on 30 June 2017 and the credit(s) will arise in the clients transfer balance account on 1 July 2017.

If your clients account happens to be over$1.6 million on 1 July 2017,you can either transfer the excess back into an accumulation account or withdraw the excess from super.

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