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Transfer balance cap

Exceeding the transfer balance cap

Section: 19.9

A member's transfer balance account is measured against their personal transfer balance cap on a daily basis. Where a client's transfer balance account exceeds their personal transfer balance cap on a particular day, the amount of excess plus a 'notional earnings amount' representing the earnings the excess amount generated in the tax-free pension environment, will be required to be commuted from one or more retirement phase income stream(s), either back to accumulation or out of the superannuation environment.

In addition, the member is required to pay 15% excess transfer balance tax on the amount of notional earnings for breaches in the 2017-18 financial year. From the 2018-19 financial year, the tax rate is 15% for a first breach, and increases to 30% for second and subsequent breaches. In some circumstances the amount of notional earnings subject to excess transfer balance tax may exceed the amount of notional earnings that had to be commuted from the retirement phase.

Last modified: Thursday, July 25, 2019