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Update- Transfer balance, contribution caps set to rise

Short and sharp update following the ATO announcement in January 2021-

Many may recall the introduction of the $1.6M transfer balance cap (TBC) applied to Pension portfolios from 1 July 2017, announced by the Federal Government in their May 2016 Budget.

The TBC, over the past 3 years remained unchanged, currently $1.6M, however, following the release of CPI figures last month and applied indexation, the cap will increase to $1.7M from 1 July 2021.

Whilst the general transfer balance cap increases to $1.7 million, there won’t be a single cap that applies to all individuals. Every individual will have their own personal transfer balance cap of between $1.6 and $1.7 million, depending on their circumstances. But for those starting a pension for the first time on or after 1 July 2021, the $1.7M cap will apply to you.

The cap increase also impacts those seeking to make further contributions to superannuation- increasing the threshold at which you can still make non-concessional contributions (NCC) from $1.6 million to $1.7 million.

Your Sovereign adviser will provide further guidance should it apply to you.

Disclosure Statement: This communication has been approved and issued by Sovereign Wealth Partners Pty Ltd ABN 18 607 071 367 Corporate Authorised Representative (No. 001233909) of Sovereign Capital Pty Ltd ABN 44 164 127 833, AFSL 456235.

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