A $1.6 million transfer balance cap will be introduced on the total amount that can be transferred into the tax-free retirement pension phase from accumulation, starting from 1 July 2017. Superannuation balances can remain in the accumulation phase if they are in excess of the transfer balance cap.

If you are in excess of the transfer balance cap before 1 July 2017, you will need to transfer the excess back into your accumulation fund or remove it from your superannuation before 1 July.

Equally, if you have a self-managed superannuation fund (SMSF) where at least one member is over their transfer balance cap, the fund will no longer be able to seperate its assets for tax purposes to calculate exempt current pension earnings, and the proportioning method will have to be applied instead. Capital gains tax relief is available for SMSFs up until 1 July 2017 and this reduces the amounts supporting superannuation income streams as a result.

Seek independent advice from a licensed financial adviser or a registered tax agent before 1 July 2017, if you are likely to be in excess of the transfer balance cap.

Also onwards from 1 July 2017, the tax exempt status of income from assets supporting transition to retirement income streams (TRIS) will be removed. Regardless of when it commenced, earnings from assets supporting a TRIS will be taxed at a maximum 15 per cent. In regards to continuing with TRIS, you may want to seek independent advice.

 

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