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.
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