Tax Alert - Transfer Balance Cap indexation & Superannuation changes

Lowe Lippmann Chartered Accountants

Transfer Balance Cap indexation & Superannuation changes

Following the recent release of the December 2025 quarterly CPI figures by the Australian Bureau of Statistics’, the general transfer balance cap (TBC) will increase from $2 million to $2.1 million from 1 July 2026.

This is applicable for superannuation fund members considering starting their first retirement phase income stream in 2026–27. This could provide tax effective retirement pension and non-concessional contribution opportunities for some members.

The Australian Taxation Office needs to formally confirm this increase.

What changes when the TBC increases?

Many total super balance (TSB) thresholds are linked to the general TBC. An increase in the general TBC from 1 July 2026 would allow members with a TSB of less than $2.1 million to make non-concessional contributions (NCCs) to super.

Currently members with a TSB of $2 million or more at 30 June of the previous year cannot make NCCs without breaching their cap.

TSB limits which determine eligibility to utilise the three year NCC bring-forward rule will also change.

Are contribution caps likely to rise?

The concessional contribution (CC) cap is based on “average weekly ordinary time earnings” (AWOTE) figures that have not yet been released (expected late February). Subject to the final AWOTE figures being confirmed at the end of February, it is very likely the CC cap will increase from $30,000 to $32,500 on 1 July 2026.

An increase in the CC cap will flow through to an increase in the NCC cap which is set at four times the CC cap. This would translate to the NCC cap rising to $130,000 and the three-year bring forward amount would rise to $390,000.

Retirement Income Streams

Individuals who commence a retirement phase income stream (ie. pension) for the first time after 1 July 2026 will have access to the full $2.1 million limit.

For some individuals there may be a benefit in deferring the commencement of a retirement income stream until on or after 1 July 2026, which may allow more assets to be moved into the tax-free retirement phase. In the interim before 1 July, members will continue paying accumulation phase tax at 15%.

Members who currently have a retirement income stream in place (or commence one before 1 July 2026) may also be entitled to a proportional increase in their TBC based on any unused amount of their TBC. This may allow additional assets to be moved into the tax-free retirement phase, after a complicated calculation has been performed.

If a member has already fully utilised their TBC, they will not be entitled to an increase.

This does not apply to “transition-to-retirement pensions”, unless they are moving into the retirement phase.

Please do not hesitate to contact your Lowe Lippmann Relationship Partner if you wish to discuss any of these matters further.

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