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Federal Budget FAQ

Transfer Balance Cap (TBC)

1. What is the Transfer Balance Cap?

The TBC is a new concept in superannuation. It is a limit applied to the total amount of superannuation that can be transferred into a superannuation income stream or pension product (a ‘retirement phase account’).

2. Who does it apply to?

The TBC will apply to all members who commence, or are already have, a retirement phase account on or after 1 July 2017.

CSCri will calculate a value as at 30 June 2017 for existing members and report this against the members TBC. Ongoing management of the cap is a matter between the member and the Australian Taxation Office (ATO).

3. How is my pension valued?

The valuation differs depending on the type of pension you are receiving.

For CSCri, it is the value as at 30 June 2017, or the value at commencement if opened on or after 1 July 2017.

If you have a defined benefit pension, your pension will be valued by multiplying your annual gross pension by a factor of 16.

4. How does this apply to my reversionary or invalidity pension?

Reversionary and invalidity pensions will be subject to the TBC and the same methodology (i.e. using a factor of 16) will be applied when calculating the credit.

5. What if I have other pension products?

The TBC is a single lifetime cap applied to an individual, and applies collectively to all amounts in the retirement phase held by that individual. If you have more than one pension product, each product will be valued and reported by the respective provider to the ATO.

6. Does the TBC limit how much I can hold in my accumulation phase account?

No, the TBC only limits how much you can transfer into a retirement phase account.

An accumulation phase account is the amount you hold in super that you have not yet claimed.

7. Do Transition to Retirement pensions count towards the cap?

No, Transition to Retirement pensions do not count towards the cap.

8. Will the TBC be indexed?

Yes, the TBC will be indexed periodically in $100,000 increments in line with CPI. However, indexation only applies to any unused cap amounts and once you have reached your cap, indexation will not apply.

9. What happens if I exceed the TBC?

Any excess within an account based pension (such as CSCri), will need to be removed and may also attract tax penalties. However, any excess within defined benefit schemes is not required to be removed. Instead, tax concessions on these pensions will be restricted to achieve commensurate treatment.

10. It is one cap per pension, or per person?

The TBC is applied to an individual, and is applied collectively to all retirement phase accounts held by that individual.

11. Do lump sum payments count towards the cap?

No, benefits withdrawn as a superannuation lump sum do not count towards the TBC.

12. Do lump sum payments count towards the cap?

No, benefits withdrawn as a superannuation lump sum do not count towards the TBC.

13. Where can I get more information?

Factsheets relating to the changes can be found on the Budget 2016–17 website fact sheet page.

Concessional Contributions Cap (CC Cap)

1. What contributions count towards the cap?

Prior to 1 July 2017, the following contributions count toward the concessional contributions cap:

  • any salary sacrifice contributions
  • any superannuation guarantee contributions
  • any employer productivity contributions

From 1 July 2017, for defined benefit schemes, a notional employer contribution will also be reported in addition to these contributions. Further information on the impact to defined benefit schemed can be found on your scheme website.

2. How will I know if I am going to exceed my cap?

We cannot tell you if you are going to exceed your cap as the cap is managed by the ATO. You should contact the ATO for this information.

3. What is the 5 year catch up provision?

One of the Federal Budget measures includes the introduction of a 5 year catch up provision. Members with an account balance* of less than $500,000 who haven’t reached their concessional contributions cap will be eligible to ‘roll forward’ their unused cap space for 5 years. This measure will commence from 1 July 2018 and be explained in more detail in a factsheet in the near future.

*A members ‘account balance’ will be taken at 30 June each year and include their superannuation accumulation value, the balance of their Transfer Balance Account, as well as any transferred amounts that have not been counted elsewhere (i.e. a mounts in transit between funds at 30 June).

Non-Concessional Contributions Cap (NCC Cap)

1. What contributions count towards the cap?

Non-concessional contributions are personal post-tax contributions for which you do not claim a tax deduction.

2. How will I know if I am going to exceed my cap?

We cannot tell you if you are going to exceed your cap as the cap is managed by the ATO. You should contact the ATO for this information.

3. Does this change the current 3 year roll-forward provision?

The 3 year roll-forward provision still applies, however it will be calculated based on the lower cap. This will be explained in more detail in a factsheet in the near future.

4. What happens if my balance is more than $1.6m or I reach my cap?

Any amount in excess of the cap, or contributions paid where an account balance* exceeds $1.6m, will result in Excess Contributions Tax being applied by the ATO.

*A members ‘account balance’ will be taken at 30 June each year and include their superannuation accumulation value, the balance of their Transfer Balance Account, as well as any transferred amounts that have not been counted elsewhere (i.e. a mounts in transit between funds at 30 June).