Reforming treatment of transfer balance cap for SFTs
The Income Tax Assessment Amendment (Superannuation) Regulations 2024External Link has now been registered with a commencement date of 6 July 2024.
The Regulations specify changes to the treatment of the transfer balance cap for successor fund transfers and will ensure individuals with a capped defined benefit income stream are not adversely impacted in the event of a successor fund transfer between superannuation funds.
Previously, the balance of the transfer balance account for some recipients of capped defined benefit income streams was unintentionally affected by the original income stream being treated as ceasing and a new one beginning.
From 6 July 2024, for the purposes of the individual's transfer balance account, a new income stream beginning as a result of a successor fund transfer will have the same beginning value as the closing value of the original income stream.
The changes will be applied retrospectively from 1 July 2017.
The ATO will be working closely with impacted superannuation funds to adjust the transfer balance accounts of recipients of capped defined benefit income streams adversely affected.