The ATO has advised that is now sending out excess transfer balance (ETB) determinations to individuals who have exceeded their superannuation transfer balance cap and not rectified the excess.
The transfer balance cap, which has applied from 1 July 2017, is a new limit on the total amount of superannuation that can be transferred into the retirement phase. An individual can continue to make multiple transfers into the retirement phase as long as the total amount transferred remains below the cap.
The transfer balance cap has initially been set at $1.6 million, and will be indexed periodically in $100,000 increments in line with the consumer price index (CPI). The amount of indexation an individual is entitled to will be calculated proportionally based on the difference between their transfer balance total and the cap amount. If an individual's transfer balance meets or exceeds the cap, they will not be entitled to indexation.
Self managed superannuation fund (SMSF) members that had exceeded their transfer balance cap by $100,000 or less on 1 July 2017 had until 31 December 2017 to commute the excess capital. If they didn't do so by that date, they will have to commute the excess capital and excess transfer balance earnings, and also pay excess transfer balance tax.
If an SMSF member receives an ETB determination from the ATO and the trustee has not already reported information to the ATO for that member, they must do so promptly so the ATO has all the required information about the member's circumstances. The member can request an extension of time if needed, but should do this as soon as possible. The sooner the member removes the amount set out in the ETB determination from retirement phase, the lower the amount of excess transfer balance tax they will pay.