On 10 March 2017, the ATO released the final version of Law Companion Guideline LCG 2016/9 dealing with the new superannuation transfer balance cap. It was released in draft form in November 2016 as Draft LCG 2016/D9.

The Guideline provides guidance on how the transfer balance cap (set at $1.6 million for the 2017-18 financial year) operates for account-based superannuation income stream products. It provides specific guidance on the following new concepts:

• the general transfer balance cap, transfer balance account, transfer balance and personal transfer balance cap (transfer balance cap);
• the consequences of a transfer balance exceeding a person's transfer balance cap, resulting in an "excess transfer balance" including:
  • the excess transfer balance tax and how this is calculated;
  • when the Commissioner will issue an excess transfer balance determination; and
  • the effect of transfers and/or commutations on the transfer balance.

The Guideline notes that transition to retirement income streams (TRIS) are not included in a transfer balance account as they are not in the retirement phase. From 1 July 2017, superannuation income stream providers will be taxed on earnings made from assets supporting a TRIS. Also, the age pension (or other types of government assistance payments) and a pension received from a foreign superannuation fund are not included in a transfer balance account because these pensions are not superannuation income streams.

Source: This article was first published in Thomson Reuters' Super & Financial Services News Alert. To subscribe to Super & Financial Services News Alert, or for more information, please see http://legal.thomsonreuters.com.au/super-financial-services-news-alert-email/productdetail/55794

More Cleardocs information on related topics

You can read earlier ClearLaw articles on the 2017 superannuation reforms including the transfer balance cap and how it can be managed.

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