Important superannuation update!
Superannuation rules can be complex, but staying informed is crucial to maximising your retirement savings. We’re here to explain the latest changes and help you navigate the evolving landscape of superannuation.
Understanding the pension transfer balance cap
The pension transfer balance cap places a limit on the amount of capital that can be transferred into a tax-exempt retirement phase. For the 2024-2025 income year, the cap remains unchanged at $1.9 million, based on the December 2023 Consumer Price Index (CPI) numbers released by the Australian Bureau of Statistics (ABS).
Initially introduced in 2017, the transfer balance cap aims to prevent wealthy individuals from misusing superannuation funds for estate planning purposes. By limiting the tax concessions available for retirement savings, the government seeks to ensure the sustainability of the superannuation system for all Australians.
Indexation and lifetime limit
Based on CPI figures, the transfer balance cap was initially set at $1.6 million and has been indexed in $100,000 increments since July 2021. For the 2023-2024 and 2024-2025 income years, the cap remains at $1.9 million, reflecting the latest CPI adjustments.
Personal transfer balance cap
When an individual commences a retirement phase income stream, their personal transfer balance cap is equal to the general transfer balance cap. This means that if you start a retirement stream in the 2024-2025 income year, your personal transfer balance cap will be $1.9 million.
Proportional indexing and compliance
For individuals who started their retirement phase income stream with a lower cap in earlier years, proportional indexing may apply based on the highest-ever balance in the transfer balance account. Compliance with these caps is essential to avoid excess transfer balance tax. We can assist you in understanding these regulations and ensuring that your superannuation strategy remains compliant with the current laws.
The Sphere difference
We understand that superannuation is not just about numbers—it’s about securing your future and achieving your retirement goals. Our tailored approach ensures that you receive personalised advice and support to make informed decisions about your superannuation strategy.
Navigating superannuation regulations can be challenging, but you can make the most of your retirement savings with the right guidance. Stay informed about changes like the pension transfer balance cap and explore how Sphere can help you optimise your superannuation strategy for a secure financial future. Reach out to us today to learn more.
Expert Business and Tax Advisors: We work for YOU, not the ATO!
About Sphere Accounting & Advisors-
At Sphere Accountants and Advisors, we’re more than just accountants. We’re protectors of your wealth, steadfast in our commitment to keep as much of your money in your hands as legally possible. Remember, we always work for you, not the ATO.
When you choose us as your tax advisor in Australia, you’re not just a client, you’re part of our team. We consider the complete picture and are always on the lookout for ways to help you to create, safeguard, and grow your wealth. This commitment holds whether you approach us as an individual or a business entity.
Our expertise isn’t confined to just taxation. We span across the realms of accounting, strategic planning, tax advisory and beyond, delivering a whole solution to fit your needs. With Sphere Accountants and Advisors, you gain a dependable ally in navigating the complex accounting landscape.
For more information, please visit our website, give us a call at (03) 8899 6399, or drop us an email. We look forward to assisting you on your financial journey.
