Excess transfer balance

If you are receiving one or more super income streams, read what to do if you have an excess transfer balance.

What to do if you have an excess transfer balance

This information is for people who are receiving or may start receiving:

  • retirementone or more retirement phase account-based income streams (where the total value exceeds your transfer balance cap)
  • a combination of one or more retirement phase account-based income streams and capped defined benefit income streams where the combined value exceeds your transfer balance cap.

Generally, when the amount you transfer into retirement phase exceeds your transfer balance cap you will have an 'excess transfer balance' at the end of a particular day.

Your excess transfer balance is the sum of:

  • the amount that exceeds your transfer balance cap; and
  • the earnings on the excess amount.

If you exceed your transfer balance cap you will have an excess transfer balance and will need to:

  • rectify the excess by commuting the excess transfer balance; and
  • pay excess transfer balance tax.

The ATO may also send you an excess transfer balance determination which will set out the amount you need to commute.

Taking extra pension payments (or a larger pension payment) doesn't create a debit in your transfer balance account and won't rectify your excess.

You need to commute the excess transfer balance amount from retirement phase as soon as possible.

This will limit the amount of excess transfer balance tax that you will be liable to pay. You do this by commuting some or all of the value of your income stream into a lump sum Unless you are commuting a death benefit income stream, you can choose to keep the commuted amount in the accumulation phase account, or cash the amount out of the superannuation system.

You can commute your excess transfer balance as soon as you are aware you are in excess, even if the ATO hasn't sent you an excess transfer balance determination. If you do this you will need to calculate the earnings on the excess amount yourself. The sooner you do this the less excess transfer balance tax you will need to pay.

If you commute your excess transfer balance before the ATO issues you with an excess transfer balance determination, they won't send it – they will only issue an excess transfer balance tax assessment.

Note: If, on 1 July 2017, you were over your transfer balance cap by $100,000 or less and you commuted this excess by 31 December 2017, you won't have to pay excess transfer balance tax. This only applied to super income streams existing on or before 30 June 2017.

Seek professional advice

It may be wise to speak with your adviser at Intuitive Super to understand how having an excess transfer balance affects you. Call us on 1300 856 064 today.

The information provided in this document, including any tax information is general information only and does not constitute personal advice. It has been prepared without taking into account any of your individual objectives, financial situation or needs. Before acting on this information you should consider its appropriateness, having regard to your own objectives, financial situation and needs. You should read the relevant Product Disclosure Statements and seek personal advice from a qualified financial adviser. From time to time we may send you informative updates and details of the range of services we can provide. If you no longer want to receive this information please contact our office to opt out. Millennium 3 Financial Services Pty Ltd ABN 61 094 529 987, AFSL 244252.
 

Last Updated:15-08-2019 13:21