{"schema_version":"1.0","generated_by":"COLE — Citation Operations & Legal Engine","product_id":"transfer-balance-cap","title":"Transfer Balance Cap Optimiser","site":"https://taxchecknow.com/au/check/transfer-balance-cap","authority":"ATO","authority_url":"https://www.ato.gov.au","jurisdiction":"Australia","language":"en-AU","currency":"AUD","last_verified":"April 2026","legislation":"Income Tax Assessment Act 1997 Subdivision 294-B (transfer balance cap and account) · s294-25 (excess transfer balance tax — 15% first excess, 30% second and subsequent) · s294-35 (personal cap set at general cap on first pension commencement) · s294-40 (proportional indexation of personal cap based on highest unused percentage) · s294-80 (commutation authority on excess determination) · s295-385 (pension phase earnings tax — 0% on TBC portion) · Superannuation Industry (Supervision) Regulations 1994 reg 1.06 (account-based pension minimum drawdown) · ATO Shortfall Interest Charge rate (used as notional earnings rate on excess)","legal_anchor":"ITAA 1997 Subdivision 294-B (Transfer Balance Cap) and s294-25 (excess transfer balance tax)","deadline":{"iso_date":"2026-06-30T23:59:59.000+10:00","display":"30 June 2026","description":"30 June 2026 — next TBC reporting date and final window before 2026-27 indexation adjustment","urgency_label":"ONGOING TAX — NOT A DEADLINE, A COMPOUNDING COST"},"key_facts":{"general_tbc_2025_26":"AUD 1,900,000","general_cap_pre_2021":"AUD 1,600,000","general_cap_2021_2023":"AUD 1,700,000","indexation_steps":"AUD 100,000 CPI","first_excess_tax_rate":"15% on notional earnings","subsequent_excess_tax_rate":"30% on notional earnings","notional_earnings_rate":"ATO shortfall interest charge (~7%)","pension_phase_earnings_rate":"0% on TBC portion (s295-385)","legal_anchor_tbc":"ITAA 1997 Subdiv 294-B","legal_anchor_excess_tax":"ITAA 1997 s294-25","legal_anchor_commutation":"ITAA 1997 s294-80"},"formula":"Personal TBC = General Cap on day of first pension commencement + Σ(General Cap Increase × Highest Unused % at each subsequent indexation event). Excess Transfer Balance = Pension Balance − Personal TBC (if positive). Annual Excess Transfer Balance Tax = Excess × Shortfall Interest Charge Rate × 15% (first excess) or 30% (second and subsequent).","thresholds":[{"label":"Never started a pension — personal cap not yet set","value":1,"status":"clear"},{"label":"Pension balance under $1.6M — within all historical caps","value":2,"status":"clear"},{"label":"Pension balance $1.6M–$1.9M — over pre-2023 personal caps","value":3,"status":"approaching"},{"label":"Pension balance over $1.9M — over current general cap","value":4,"status":"trap"},{"label":"Pension started pre-2021 + balance over $1.6M — silent excess","value":5,"status":"deep_trap"}],"common_ai_errors":[{"error_id":1,"ai_says":"ChatGPT says: The Transfer Balance Cap is $1.9M and applies to everyone the same way","correct":"Reality: $1.9M is the GENERAL cap for 2025-26. Your PERSONAL cap is set at the general cap on the day you first started your pension (s294-35). If you started before July 2021, your personal cap is $1.6M. Pre-July 2023 starters have $1.7M. Only post-July 2023 starters have $1.9M from day one. This is the most common TBC mistake in generic advice."},{"error_id":2,"ai_says":"ChatGPT says: If the general cap increases, my cap increases automatically","correct":"Reality: Proportional indexation only applies to the UNUSED percentage of your personal cap at each general cap indexation event (s294-40). If your pension was at 100% utilisation when the general cap rose, you get ZERO indexation benefit forever. Members at or over their personal cap at each indexation date are permanently frozen."},{"error_id":3,"ai_says":"ChatGPT says: Excess transfer balance tax is a one-time penalty","correct":"Reality: Excess transfer balance tax is assessed on notional earnings EVERY YEAR you remain in excess, under ITAA 1997 s294-25. First excess determination: 15% on ATO-calculated notional earnings (shortfall interest rate ~7%). Second and subsequent determinations: 30%. Plus a commutation authority forcing the excess back to accumulation phase. It compounds until resolved."}],"faq":[{"id":1,"question":"What is the Transfer Balance Cap?","answer":"The Transfer Balance Cap (TBC) is a lifetime limit on how much superannuation can be held in the tax-free retirement phase — the part of super where earnings are taxed at 0% under ITAA 1997 s295-385. It was introduced from 1 July 2017. The general TBC is indexed to CPI in $100,000 increments. For 2025-26 the general cap is $1,900,000. Each member has a personal TBC which is set when they first start an account-based pension."},{"id":2,"question":"Why might my personal TBC be lower than $1.9M?","answer":"Your personal TBC is fixed at the general cap on the day you first commenced an account-based pension (ITAA 1997 s294-35). If you started your pension between 1 July 2017 and 30 June 2021, your personal cap is $1,600,000. Between 1 July 2021 and 30 June 2023, $1,700,000. From 1 July 2023 onwards, $1,900,000. The personal cap only increases proportionally based on how much of the cap was UNUSED when the general cap indexed up — if you were at 100% utilisation, no indexation applies and your cap is permanently frozen."},{"id":3,"question":"What happens if I exceed my personal TBC?","answer":"The ATO issues an excess transfer balance determination based on information received from your super fund. Under s294-25, the ATO calculates notional earnings on the excess using the shortfall interest charge rate (approximately 7% as of April 2026) and taxes those earnings at 15% for the first excess, or 30% for second and subsequent excesses. The ATO also issues a commutation authority under s294-80 requiring you to move the excess back to accumulation phase or withdraw it. The tax applies every year you remain in excess — it compounds."},{"id":4,"question":"How do I fix being over my personal TBC?","answer":"Four main levers: (1) COMMUTATION — move the excess from pension phase back to accumulation phase, where earnings are taxed at 15% rather than 0%. Required anyway once ATO issues a commutation authority. (2) WITHDRAWAL — remove the excess from super entirely if 60+ retired (tax-free under s301-10). (3) SPOUSE EQUALISATION — transfer super to a spouse with unused cap room via contribution splitting or withdrawal/recontribution. (4) PROPORTIONAL INDEXATION VERIFICATION — check whether you're owed indexation that wasn't automatically applied. If you had unused cap at an indexation event, you may be entitled to more cap than the ATO has recorded."},{"id":5,"question":"Does the Transfer Balance Cap apply to defined benefit pensions?","answer":"Defined benefit income streams are subject to a separate income-based cap rather than the account-based cap applicable to account-based pensions. The mechanism differs — there is no 'balance' in a defined benefit context; instead the annual income from the defined benefit pension is capped based on a special value calculation. This product is designed for account-based pensions (SMSF and APRA). If you have a defined benefit pension, consult your accountant for the specific income-based cap calculation."}],"sources":[{"title":"ATO — Transfer Balance Cap overview","url":"https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/transfer-balance-cap"},{"title":"ATO — Excess transfer balance tax determinations","url":"https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/transfer-balance-cap/excess-transfer-balance"},{"title":"ATO — Personal transfer balance cap and indexation","url":"https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/transfer-balance-cap/personal-transfer-balance-cap"},{"title":"ATO — Key superannuation rates and thresholds (TBC history)","url":"https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds"}],"products":{"tier1":{"name":"Your TBC Position Pack","price":67,"currency":"AUD","description":"Your exact personal Transfer Balance Cap — calculated from your commencement year, not the generic $1.9M figure","url":"https://taxchecknow.com/au/check/transfer-balance-cap/success/assess"},"tier2":{"name":"Your Full TBC Strategy","price":147,"currency":"AUD","description":"Commutation plan, spouse cap equalisation, reversionary pension modelling — the strategy layer most advisers skip","url":"https://taxchecknow.com/au/check/transfer-balance-cap/success/plan"}},"monitor_urls":["https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/transfer-balance-cap"],"canonical":"https://taxchecknow.com/au/check/transfer-balance-cap","api_endpoint":"/api/rules/transfer-balance-cap","generated_at":"2026-04-22T14:02:06.223Z"}