General transfer balance cap to remain at $1.7m this year
While the general transfer balance cap will not be indexed this year, an indexation increase up to $1.8 million is looking likely for July next year, according to Colonial First State (CFS).
This week, the Australian Bureau of Statistics (ABS) released the consumer price index (CPI) figures for December 2021, with the All Groups CPI figure for the December quarter sitting at 121.3.
CFS head of technical services Craig Day said this means the general transfer balance cap would not index in 2022 and would remain at $1.7 million for at least the 2022-23 financial year.
“Essentially what that new CPI figure does, is it gives us an indexation factor of 1.103 which gives an indexation figure of $1,764,000 which is then rounded back down to $1.7 million so there’s no increase,” Mr Day explained.
“The interesting thing to note, however, is that if we get a CPI figure next December of 123.7, that will result in indexation of the transfer balance cap in 2023 to $1.8 million. That’s only 1.98 per cent higher than the current CPI figure, and given that the financial press is saying that we’re moving into a higher inflationary environment because of all the COVID constraints it may well be that we see indexation to $1.8 million in 2023.”
Mr Day noted that it took four years for the first indexation increase to occur when the general transfer balance cap increased from $1.6 million to $1.7 million in July last year.
“It seems that we may get the second round of indexation in only two years,” he said.
The average weekly ordinary time earnings (AWOTE) figure, which impacts the indexation of the concessional and non-concessional contribution caps, will not be released till 24 February.
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
