ATO issues more draft guidance on Transfer Balance Cap issues

The ATO has issued more draft guidance on the operation of the Transfer Balance Cap and related issues, coming from the changes to superannuation in the ‘fair and sustainable’ reform package.

ATO consults on Transfer Balance Cap, transitional CGT relief guidelines

Updates:

The ATO has issued LCG 2017/D1: Superannuation reform: defined benefit income streams – pensions or annuities paid from non-commutable, life expectancy or market-linked products – a draft Law Companion Guide (LCG). A LCG is a type of public ruling, which sets out the ATO’s view on how a recently enacted law applies.

“This draft Guideline clarifies how the defined benefit income cap applies to superannuation income stream pensions or annuities that are paid from non-commutable, life expectancy or market-linked products,” says the draft LCG.

“As with other types of superannuation income streams, the value of capped defined benefit income streams count towards an individual’s transfer balance cap. The transfer balance cap regime is designed to limit the amount of an individual’s superannuation that can be moved into the retirement phase, where it benefits from the fund earnings tax exemption.”

“Capped defined benefit income streams cannot, of themselves, result in an excess transfer balance for an individual. Instead, modifications to the general transfer balance cap rules apply.”

The is the most recent draft LCG on the Transfer Balance Cap and related issues, with several released late in 2016:

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2 Replies to “ATO issues more draft guidance on Transfer Balance Cap issues”

  1. My Defined Pension has no cash value in that I can not withdraw even a penny from my non existent balance …BUT it is deemed that I have cash in my Super Fund?

    Maybe I can make a deemed lump sum cash withdrawal???

  2. It seems the annual amount of pension (whether indexed for CPI or not) will be multiplied by 16 to ascertain your current balance.
    Private sector pensions can be up to $100 000 and are tax free after 60.
    Defined benefit pensions are supposed to be treated commensurately, but many (all?) of these are still subject to taxation after age 60. This does not seem commensurate to me.

    The balance of allocated pensions can be paid to your estate.
    Defined benefit pensions, except where there is a spouse or dependents, die with you even if only drawn for a short period.

    With private pensions, you have control over how much you can withdraw as a pension or lump sum.
    With defined benefit pensions, regardless of your starting balance (value at 1/7/17 x 16), you have no ability to draw a smaller pension to retain balance as it is simply paid to you (and taxed).

    There seems to me to be a lot of issues which are not being addressed equitably .

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