Transfer balance account

What your transfer balance account is used for

Your transfer balance account records in effect how much super you have transferred into retirement phase interests, less any amounts in retirement phase you have taken as lump sums.

Your transfer balance account is:

• credited when you transfer money into a retirement phase account (normally this is when a new retirement phase account is created) or your transition to retirement income stream moves into retirement phase.
• debited when you commute or remove money from retirement phase.

Some other events will also result in credits and debits.

The balance of your transfer balance account is compared with your personal transfer balance cap to determine:

• whether you have exceeded your personal transfer balance cap at the end of a particular day
• your available cap space that would allow you to add to your interests in retirement phase
• if you're entitled to proportional indexation.

You will only have one transfer balance account for all your retirement phase interests, and it remains active until your death.

Special rules apply for child recipients of a death benefit income stream.

Your transfer balance account commences on either:

• the day you first receive a retirement phase income stream after 1 July 2017
• 1 July 2017, if you were already receiving a retirement phase income stream on 30 June 2017.

Your transfer account balance and total superannuation balance are calculated differently and used for different purposes. Your total super balance is relevant when working out your contribution caps and eligibility for other super related measures, including co-contributions and the spouse tax offset. Some of these measures set the limit for the total super balance as being equal to the general transfer balance cap.

View your transfer balance account

You can view your account, including available cap space, on ATO online services.

• sign in to myGovExternal Link
• select Australian Taxation Office
• select Super, then Information, then Transfer Balance Cap.

Exceeding your personal transfer balance cap

If you exceed your personal transfer balance cap, you may have to:

• commute the excess into a lump sum payment or back into accumulation phase
• pay tax on the notional earnings related to the excess.

For more information, see Excess transfer balance.

If investment earnings on your retirement phase account results in its balance exceeding your personal transfer balance cap, you won’t exceed your cap. If the amount in your retirement phase account goes down over time, you can’t top it up if you've already used all of your personal cap space.

Different tax rules apply to capped defined benefit income streams, as you usually can’t transfer or commute excess amounts from these income streams.

Managing your transfer balance account

Your transfer balance account records transfers into and out of retirement phase as credit or debit events.

All of your retirement phase income streams are taken into consideration, including capped defined benefit income streams and market linked pensions.

The value of your superannuation interests is calculated by your super fund and reported to us. If you believe the value reported is incorrect you should contact your super fund. You can view your personal transfer balance cap, available cap space and transfer balance account transactions on ATO online services.

Credits to your account

Generally, a credit arises in your transfer balance account when you become the recipient of a super income stream that is in retirement phase.

The following circumstances will result in a credit in your transfer balance account:

• super income streams that were in existence just before 1 July 2017 and you continue to receive them after that date – including both reversionary and non-reversionary death benefit income streams
• new super income streams that started after 1 July 2017 – including both reversionary and non-reversionary death benefit income streams
• when a transition to retirement income stream enters retirement phase
• repayments from a limited recourse borrowing arrangement under a contract entered into on or after 1 July 2017
• excess transfer balance earnings.

These credits increase your transfer balance account and reduce your available personal cap space.

Super income streams

An income stream is a series of periodic benefit payments to a member. This includes both reversionary and non-reversionary death benefit income streams and can be either:

• account-based income streams (the amount supporting the income stream is allocated to a member's account)
• non-account-based income streams, including capped defined benefit income streams (these are income streams that don't have an identifiable account balance in the member's name. The member receives regular payments, usually guaranteed for life).

(A reversionary income stream automatically reverts to a nominated beneficiary on the death of its current recipient.)

Account-based income stream

If you were receiving an account-based super income stream just before 1 July 2017, and you continued to receive it after that date, your fund will have reported the value on 30 June 2017 of all the super interests that support the income stream in retirement phase that you were receiving at that time.

If you started an income stream after 1 July 2017, your fund will report the commencement value of the super income stream. This includes death benefit incomes streams and market linked pensions.

Transition to retirement income streams (TRIS) that are in retirement phase are also included in the transfer balance account. Your TRIS will start to count towards your transfer balance cap on the day it becomes a retirement phase income stream, based on its value on that day. A TRIS isn't in retirement phase until the member meets a condition of release with a nil cashing restriction.

Capped defined benefit income streams

Capped defined benefit income streams are treated differently because you can only commute these income streams in limited circumstances.

Capped defined benefit income streams are:

• lifetime pensions, regardless of when they commence
• lifetime annuities that existed just before 1 July 2017
• life expectancy pensions and annuities that existed just before 1 July 2017
• market-linked pensions and annuities that existed just before 1 July 2017.

The modified value of a capped defined benefit income stream is referred to as the 'special value', which will be calculated by your superannuation provider.

A capped defined benefit income stream won't give rise to an excess transfer balance by itself. However, you may have an excess transfer balance when you have a combination of both an account-based income stream and a capped defined benefit income stream.

If the combined value of the account-based income stream and the 'special value' of the capped defined benefit income stream is in excess of your personal transfer balance cap, you will be required to commute the excess transfer balance from the account-based income stream.

For more information, see Transfer balance cap – capped defined benefit income streams.

Reversionary income streams

The value of your reversionary super income stream is calculated at the time you first become entitled to payments from it. This is usually the date of death of the original member. A credit arises in your transfer balance account for this value, twelve months after the date of death. However, your fund will report this to us once you become eligible to receive it.

Limited recourse borrowing arrangements

A credit will arise in your transfer balance account in relation to a payment made by a super fund under a limited recourse borrowing arrangement (LRBA) that was entered into on or after 1 July 2017 where both:

• the payment results in an increase in the value of the super interest that supports your super income stream in the retirement phase
• your super interest is in a self-managed super fund (or another complying super fund with less than 7 members).

Excess transfer balance earnings

If you have exceeded your personal transfer balance cap, we will credit your transfer balance account with the earnings that accrue on your excess transfer balance amounts.

We will advise you of the amount credited to your excess transfer balance account when we issue an excess transfer balance determination.

If you want to remove your excess before you receive a determination, you need to ensure that you remove the correct amount of earnings. The earnings are calculated up to the date that the excess was removed from retirement phase.

Excess transfer balance earnings will continue to accrue (and you will be liable for excess transfer balance tax on those earnings) until your transfer balance is equal to or less than your personal transfer balance cap.

Debits to your account

Debits to your transfer balance account reduce your transfer balance and increase your available cap space.

Debit events include:

• commutations
• structured settlement contributions
• reductions in your defined benefit lifetime pension or annuity due to a change in your circumstances
• losses due to fraud and bankruptcy
• family law payment splits
• super income streams that
  • cease to be in the retirement phase
  • fail to comply with the standards 
   
• non-commutable excess transfer balance amounts.

Pension payments and investment losses from your retirement phase income streams are not commutations and they don't result in debits to your transfer balance account.

Commutations

Your transfer balance account is most commonly debited when you fully or partially commute a retirement phase income stream. This is usually from an account-based income stream. A commutation is the exchange of part or all of the value of your income stream for a lump sum. The lump sum can either be:

• paid out of the superannuation system
• retained in an accumulation phase account (unless it is a death benefit income stream).

When you receive a super death benefit as a lump sum this must be taken out of the superannuation system and not left in an accumulation phase account.

You can choose to request a commutation from your super fund if you're in excess of your personal transfer balance cap.

If you choose not to commute the excess, we will issue a commutation authority to your super fund to have the excess removed from the retirement phase.

If a super income stream is fully or partially commuted, your transfer balance account is debited by the value of the commutation. The debit arises when you receive the lump sum, not at the time you instruct the super fund to commute the income stream. Unless you are commuting a super death benefit income stream, you can choose to transfer the lump sum to an accumulation account or withdraw it from the superannuation system.

Structured settlement contributions

A structured settlement is a payment for a personal injury you have suffered. A corresponding debit will arise in your transfer balance account to offset the credit that occurs when you receive and contribute a structured settlement amount to your super.

A debit arises in your transfer balance account when you make the contribution of the structured settlement amount or at the time that you first have a transfer balance account, whichever is later.

For the debit to arise in your transfer balance account, the structured settlement contribution must be made to a super fund within 90 days of being received, or the structured settlement order coming into effect, whichever is later.

You must notify your super fund that the contribution is being made under this exemption before, or when, making the contribution to enable them to treat it appropriately and report it correctly to us.

When structured settlement contributions were made before 1 July 2017, the debit for the structured settlement contribution you've made will include any investment growth that had occurred on the structured settlement contributions.

Defined benefit lifetime pension or annuity reduced due to a change in circumstances

You may be entitled to a debit in your transfer balance account if your defined benefit income stream reduces because of a change in your circumstances, such as when a reversionary defined benefit pension is paid to a surviving spouse or beneficiary. These reductions occur mainly with public sector superannuation schemes.

Failure to comply with pension or annuity standards

If your super fund fails to comply with the rules or standards for your income stream, the income stream may cease to meet the definition of a 'superannuation income stream'. This means it will no longer be eligible for the earnings tax exemption.

Failure to comply with a commutation authority

If your super fund fails to comply with a commutation authority, the relevant income stream will cease to be in the retirement phase. This will apply from the start of the income year in which the fund failed to comply with the commutation authority. This means it will no longer be eligible for the earnings tax exemption for that income year, or future income years. A debit will arise in your transfer balance account equal to the value of your income stream at the end of the period specified in the commutation authority.

Non-commutable excess transfer balance

In some situations, you may have an excess transfer balance and no remaining retirement phase income streams from which you can commute the excess.

This may occur because either:

• the only retirement phase super income streams you have are capped defined benefit income streams
• you are no longer a retirement phase recipient of any super income stream.

If your super fund notifies us that you have insufficient value to commute to resolve your excess transfer balance and the account is closed, we will notify you in writing that you have a non-commutable excess transfer balance. When we issue the notice, a debit arises in your transfer balance account equalling and removing the excess.

Replenishment debits including family law payment split

There are a limited number of events that may result in an individual losing some or all of the value in their superannuation interests, including:

• a family law payment split
• a debit event from fraud, dishonesty or bankruptcy.

You must report these debits to us on a Transfer balance event notification form (TBEN).

Family law split

Superannuation interests may be split as part of the division of property following a divorce or relationship breakdown. One party (the member spouse) will be required to provide a proportion of their retirement phase super interests to the other party (the non-member spouse).

For either spouse, the debit arises either when the payment split becomes operative (under the Family Law Act 1975) or when they start to have a transfer balance account (whichever is later).

A payment split may involve the member spouse either:

• commuting part of their super income stream into a lump sum, which is then paid to the non-member spouse (this will be reported as a commutation by the member's super fund, and the member doesn't need to complete a TBEN to notify us of this event)
• retaining complete ownership of their super interest but having a portion of each payment from their retirement phase income stream directed to the non-member spouse (either spouse must notify us in writing on a TBEN). To complete the form correctly, the notifying spouse will need to ask the member’s super fund for certain information.

For more information on family payment splits see Super and relationship breakdowns.

 

Rolling over your pension

When you roll over your retirement phase income stream, you will get both:

• a debit in your transfer balance account when you commute the income stream in your old fund
• a credit in your transfer balance account when you start a retirement phase income stream in your new fund.

These debit and credit events will be reported to us by your super funds.

You need to ensure that the value of the super income stream you start does not result in you exceeding your personal transfer balance cap.

In some instances, the value of the debit when you commute your retirement phase income stream will not equal the value of the pension you start with the same assets. For example, if there has been a growth or loss in the value of the assets while they were not in retirement phase. When you start a new pension be aware of your available personal transfer balance cap space.

Check your transfer balance account to see what your super funds have reported and your personal transfer balance cap.