Some of the key superannuation rates and thresholds, including the contribution caps and transfer balance cap, will increase from 1 July 2021. Following the announcement of the AWOTE figure for the December 2020 quarter, the concessional contribution cap is set to increase from $25,000 p.a. to $27,500 pa from 1 July 2021. As other superannuation caps and thresholds are tied to the concessional contribution cap, these caps will also increase accordingly.

The table shows the current rates, and the new rates which will apply from 1 July 2021 onwards:

We note that the increase to the TBC of $1.7 million will impact individuals differently depending on their circumstances.

For individuals starting a retirement phase pension for the first time on or after 1 July 2021, they will get the full benefit of the indexation and have a personal TBC of $1.7 million.

For individuals who had a transfer balance account (ie, started a retirement phase pension) before 1 July 2021, their personal TBC will be:

$1.6 million if, at any time between 1 July 2017 and 30 June 2021, the balance of that account was $1.6 million or more (ie, no indexation applies);
Between $1.6 and $1.7 million in all other cases. Proportionate indexation applies, based on the highest ever balance in the transfer balance account.

For example, if the highest ever balance in an individual’s transfer balance account was $1.2 million, there is a gap of $400,000 between that amount and the current TBC, or 25% of the TBC. Accordingly, from 1 July 2021, that individual will get 25% of the $100,000 increase to the TBC (ie, $25,000), meaning their new TBC is $1.625 million.

To discuss or for further information please contact:

Phil Broderick
Principal
M +61 419 512 801 | T +61 3 9611 0163
E: pbroderick@sladen.com.au

Philippa Briglia
Senior Associate
T +61 3 9611 0173
E pbriglia@sladen.com.au