Transfer Balance Cap transition deadline looms for SMSFs

SMSFs impacted by the Transfer Balance Cap are being urged, by the SMSF Association, to seek advice before the transitional deadline of 31 December 2017.

One of the 2016 Budget measures, the Transfer Balance Cap commenced on 1 July 2017. It limits the amount that can be held in pension phase, requiring amounts over the 1.6 million cap to be removed from the retirement phase or else imposes a tax penalty. There is a transitional rule, which ends on 31 December, allowing a grace period of 6 months for Transfer Balances of $1.6 million to $1.7 million. Super funds with Transfer Balance amounts over $1.6 million will start accruing excess transfer balance tax from 1 January 2018.

The SMSF Association is recommending SMSFs seek specialist advice if they have questions or doubts about how the Transfer Balance Cap (TBC) rules will affect their fund.

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

“The looming deadline of the TBC transitional period is not the only reason that SMSF trustees should connect with an SMSF Specialist,” he said.

“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.”

“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.”

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