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Transfer balance cap

Excess transfer balance transitional rules

Section: 19.10

Transitional rules applied between 1 July 2017 and 31 December 2017 for members who exceeded their transfer balance cap by less than $100,000 on 1 July 2017.

Where, at 1 July 2017, a member had transfer balance credits of between $1,600,000 and $1,700,000 from retirement income streams commenced prior to 1 July 2017, no excess transfer balance arose (and therefore no excess transfer balance tax was payable) provided no further transfer balance account credits arose, and the excess amount was removed from the retirement phase, by 31 December 2017.

It is important to note that access to the transitional rules was based on a member's existing transfer balance credits rather than their excess transfer balance. This means that where a member had a capped defined benefit income stream (commenced prior 1 July 2017) with a special value greater than $1.6 million, the full special value was taken into account when determining whether the member could access the transitional rules.

While a member would not have had an excess transfer balance relating to their capped defined benefit income stream, it may have impacted their ability to use the transitional rules in respect of other income streams.

Example:

At 30 June 2017, Greg had an existing capped defined benefit income stream with a special value of $2 million, and an account based pension with a current value of $80,000. As Greg's total transfer balance credits at 1 July 2017 were $2,080,000, he was unable to use the transitional rules, even though his excess transfer balance was only $80,000.

Last modified: Thursday, July 25, 2019