December Transfer Balance Cap Deadline Looms

Media Releases

December Transfer Balance Cap Deadline Looms

SMSF Association Media Release

22 November 2017

SMSF trustees need to ensure that their funds comply with the Transfer Balance Cap (TBC) rules before the transitional period runs out on 31 December.

The SMSF Association is recommending all SMSF trustees seek Specialist advice if they have any questions or doubt about how the TBC legislation will affect their fund.

Introduced by the Government from 1 July 2017, the new rules require trustees to remove any excess funds held in their retirement phase account above $1.6 million. A transitional rule which allowed a grace period of 6 months for transfer balances between $1.6 million and $1.7 million will end 31 December 2017.

SMSF Association CEO John Maroney said: “With the 31 December deadline fast approaching, it is more important than ever for SMSF trustees to ensure their funds are within the limits.”

From 1 January 2018, all funds in excess of the $1.6 million cap will be considered over the limit and therefore start accruing an excess transfer balance tax. Even excess amounts of $100,000 or less, will be considered over the cap at the end of 2017.

Maroney says: “The looming deadline of the TBC transitional period is not the only reason that SMSF trustees should connect with an SMSF Specialist. There are other issues that are also affected by the TBC that they may need to discuss. For example, the TBC could impact the amount of death benefits that a beneficiary can receive as an income stream, so trustees may need to redesign their death benefit arrangements.”

In addition to the end of the transitional period, SMSF trustees will have to adjust to new reporting requirements from 1 July 2018 with the introduction of event based reporting.

The ATO will require SMSFs to report relevant TBC events on a quarterly basis if a member of the fund has a total super balance of $1 million or more, while all other SMSFs will report on an annual basis.

“With only about 6 weeks to go until the end of 2017, there is still time to consult with a SMSF Specialist Adviser to ensure SMSF’s are set up to comply with the TBC.”

To find your nearest SMSF Specialist Advisor, use our ‘Find a Specialist’ function here.