The general transfer balance cap (TBC) indexation is scheduled to increase by an additional amount of $200,000 on July 1st, 2023. This means the transfer balance cap for anyone beginning their first retirement phase income stream after this date is $1.9 million.

To determine the eligibility, the tax office will look for the highest ever balance amount in an individual’s transfer balance account. Using this data, it will determine the proportional growth in their TBC and apply it to their account. This means, on average a personal TBC will range from $1.6 million to $1.9 million.

About Eligibility Calculation

The ATO do the calculation of personal TBC by collecting and analysing the data as of June 30, 2023 business closing. The personal TBC of the individual will then be used and displayed.

An individual who had a transfer balance account before indexation will only be able to access their personal TBC through ATO online services after indexation. Those having a personal TBC and ever met or surpassed the average range will not be subject to indexation; it will remain the same.

Does late or retrospective reporting after indexation effect anything?

There can be serious repercussions for the person if this happens. Using this additional information to their account, the tax office will re-evaluate whether they were entitled to proportional indexation.

Are there any effects on other restrictions and caps?

Indexation will cause a ripple effect throughout the tax and super systems. The defined benefit cap, which will rise to $118,750 is included in this effect.

If you are not aware of indexation and how it works, it is important to seek the guidance of a professional tax accountant who knows the ins and outs of indexation. At KPG Taxation, we have a team of skilled tax agents having years of experience in SMSF, super, and TBC. For more details on transfer balance cap indexation, talk to our team today.