The December 2024 Consumer Price Index (CPI) number has been released, confirming that the superannuation general transfer balance cap will increase by $100,000 to $2.0 million for the 2025–2026 income year.
The transfer balance cap was introduced in 2017, and is a lifetime limit on the amount of superannuation that you can transfer into one or more retirement phase income streams. Earnings on superannuation in the retirement phase are currently tax-free and income or withdrawals after age 60 are also generally tax-free. The cap was introduced to more equitably distribute superannuation tax concessions and ensure that the superannuation system is sustainable over the long term.
Unlike other superannuation caps, such as contribution caps, the general transfer balance cap is not indexed in line with Average Weekly Ordinary Time Earnings (AWOTE), but is annually adjusted based on CPI in $100,00 increments.
The cap was $1.6 million from 2017 to 2021; $1.7 million from 2021 to 2023; $1.9 million from 2023 to 2024 and will be $2.0 million from 2025–2026.
A personal transfer balance cap applies to you as an individual when you start a retirement phase income stream for the first time. Your personal transfer balance cap will equal the general transfer balance cap at that point in time. So, if you start your retirement phase income stream on or after 1 July 2025, your personal transfer balance cap will be set at $2.0 million.
If you started an income stream before 1 July 2025, depending on the date, you would have a personal transfer balance cap of between $1.6 million and $1.9 million. If you didn’t use the full amount of your personal transfer balance cap at the time, a proportional increase may potentially apply to your personal transfer balance cap on 1 July 2025.
If you exceed your personal transfer balance cap, the excess must be withdrawn from the income stream and taken in cash or transferred back into your superannuation account, and an excess transfer balance tax would need to be paid. The ATO will generally notify you and send you an excess transfer balance determination to let you know you’ve exceeded your personal transfer balance cap.
Using ATO online services via your MyGov account can help you keep track of your personal transfer balance cap and your transfer balance account (including any excess over your cap), recording all the debits and credits that make up your balance.
Important: Clients should not act solely on the basis of the material contained here. Items herein are general comments only and do not constitute or convey advice per se. Also, changes in legislation may occur quickly. We, therefore, recommend that our formal advice be sought before acting in any of the areas.
