Threshold for tax-free retirement super increases
The amount of money that can be transferred to a tax-free retirement account will increase to $2m on 1 July 2025.
Each year, advisers await the December inflation statistics to the be released. The reason is simple, the transfer balance cap – the amount that can be transferred to a tax-free retirement account – is indexed to the Consumer Price Index (CPI) released each December. If inflation goes up, the general transfer balance cap is indexed in increments of $100,000 at the start of the financial year.
In December 2024, the inflation rate triggered an increase in the cap from $1.9m to $2m.
The complexity with the transfer balance cap is that each person has an individual transfer balance cap. If you have started a retirement income stream, when indexation occurs, any increase only applies to your unused transfer balance cap.
Considering retiring in 2025?
If you are considering retiring, either fully or partially, indexation of the transfer balance cap provides a one-off opportunity to increase the amount of money you can transfer to your tax-free retirement account. That is, if you start taking a retirement income stream for the first time in June 2025, your transfer balance cap will be $1.9m but if you wait until July 2025 your transfer balance cap will be $2m, an extra tax-free $100,000.
Already taking a pension?
If you are already taking a retirement income stream, indexation applies to your unused transfer balance cap - so you might not benefit from the full $100,000 increase on 1 July 2025.
Where can I see what my cap is?
Your superannuation fund reports the value of your superannuation interests to the ATO. You can view your personal transfer balance cap, available cap space, and transfer balance account transactions online through the ATO link in myGov.
If you have a self-managed superannuation fund (SMSF), it is very important that your reporting obligations are up to date.
Thinking outside the box.
Our thinking doesn’t
just deliver value.
It saves you time.
It’s more than just reducing expenses or helping you improve profitability today. It's about fast tracking your success by taking the time to build a shared vision of your best future. Backed with dedicated and unparalleled team industry leading expertise, empowering you with the tools and guidance to make informed decisions, streamline your financial processes, raise the bar on what’s possible and help you achieve your business goals more efficiently.
The most valuable thing to our success is you. The most valuable thing to you is time.
Where knowledge meets
understanding in tax solutions.
With 35 years of experience, we know that a good business stems from the roots; from our people.
We offer a unique combination of taxation, accounting, financial and advisory services tailored to the individual requirements of your business.
The contents of this website should be read in conjunction with the Terms & Conditions and Privacy Policy.
LIABILITY LIMITED BY A SCHEME APPROVED UNDER PROFESSIONAL STANDARDS LEGISLATION
Liability Limited by a Scheme Approved under Professional Standards Legislation