The General TBC will increase from $1.7 million to $1.9 million.

The General Transfer Balance Cap (TBC) will increase from 1 July 2023 following the release of the CPI figures (by the Australian Bureau of Statistics). The General TBC will increase from $1.7 million to $1.9 million. The increase means the amount of superannuation benefit that an individual will be able to transfer into retirement phase pensions will increase.

Due to the proportionate indexation method that is used to increase individual Transfer Balance Caps, not everyone will benefit in the same way – some won’t benefit at all. The increase will impact those wanting to maximise contributions in the next few years. Someone who has already fully utilised their TBC before this date will not receive any personal benefit from the upcoming increase to the General TBC.

The amount of non-concessional contributions an individual can make each year is determined by their total superannuation balance. The relevant Total Superannuation Balance threshold applied is based on the General Transfer Balance Cap. As such, these thresholds will also increase from 1 July 2023.

In certain circumstances, a strategy consideration may involve the deferral of pension commencements, or the deferral of non-concessional contributions, until the higher caps are effective from 1 July 2023. As always, deferral strategies need to closely watch out any legislative change that may affect their effectiveness.

If you are currently receiving a Transition to Retirement Income Stream (TRIS) will need to remain vigilant to ensure the TRIS doesn’t inadvertently convert to a retirement phase pension before 1 July 2023.

Non-concessional contributions

As the value of the TBC is used when applying the Total Superannuation Balance (TSB) test for various other superannuation measures, several TSB thresholds will also increase from 1 July 2023.

Concessional and NCC caps will not directly change because of the increase to the General TBC, there will however be flow on impacts for those individuals seeking to make NCCs from 1 July 2023.

Currently an individual’s ability to bring-forward 2 years’ worth of NCCs, enabling a NCC of up to $330,000 in one year, is reliant on their TSB currently being less than $1.48 million (measured on 30 June of the previous financial year).

The increase to the General TBC will also have flow-on benefits, by increasing the TSB threshold used to determine eligibility, for the spouse contribution tax offset and the Government co-contribution.

Disclaimer: This article contains general information only. Regrettably, no responsibility can be accepted for errors, omissions or possible misleading statements or for any action taken as a result of any material in this guide. It is not designed to be a substitute for professional advice, as such a brief guide cannot hope to cover all circumstances and conditions applying to the law as it relates to these items.