The ATO’s deputy commissioner, superannuation and employer obligations, James O’Halloran, recently spoke at the Association of Superannuation Funds of Australia’s (ASFA) 2019 National Policy Roadshow.

O’Halloran offered many revealing insights into ATO activity and planning regarding its superannuation policy and frameworks (see the full text of his speech here), but among these items he referenced the indexation of the transfer balance cap (TBC), which has been one of those “at some stage” inevitabilities since the legislation was introduced.

From the insights revealed by the deputy commissioner, it seems this development is close enough now to mean that SMSF members/trustees should start to think about the possible consequences for their own retirement saving plans.

As a reminder, O’Halloran mentioned that the requirement for indexation is contained in the Treasury Laws Amendment (Fair and Sustainable Superannuation) Act 2016 with a date of effect of 1 January 2017. The legislation provides that the general TBC is to be indexed in increments of $100,000 if the indexation rate reaches a prescribed figure (and this is calculated using a formula set out in the legislation).

“Therefore, a matter to be aware of is that indexation could occur on 1 July 2020 or 1 July 2021,” he said. “However, it is important to note that this will depend on the December 2019 indexation rate and if it reaches 116.9 index points.” (At 30 June 2019 the CPI was at 114.8 — see quarter ending rates for CPI here.) Readmore