Transfer Balance Cap
The maximum amount of super you can transfer into a tax-free retirement phase income stream — $2.1 million for 2026-27.
The transfer balance cap (TBC) limits the total amount of superannuation that can be transferred from the accumulation phase (where earnings are taxed at 15%) into the retirement phase (where earnings are tax-free). For 2026-27, the general transfer balance cap is $2.1 million. It was originally set at $1.6 million when introduced on 1 July 2017 and is indexed in $100,000 increments in line with CPI.
Each individual has their own personal transfer balance cap, which may be less than the general cap if they commenced a retirement phase income stream before the cap was indexed. Your transfer balance account tracks credits (amounts transferred into retirement phase) and debits (amounts moved out). If you exceed your cap, you must commute (withdraw or transfer back) the excess, and the ATO will apply an excess transfer balance tax — 15% for the first breach and 30% for subsequent breaches, plus notional earnings on the excess.
The TBC is a lifetime limit, not an annual one — once you use your cap space, it's gone (though your cap space can increase if the general cap is indexed and you haven't fully used your previous cap). For couples, each partner has their own TBC, so a couple could have up to $4.2 million in the tax-free retirement phase (2 × $2.1 million). This is a key consideration for estate and retirement planning.
How it works
The transfer balance cap limits how much super you can move out of the accumulation phase, where earnings are taxed at 15%, into the retirement phase, where earnings become tax-free. The general cap for 2026-27 is $2.1 million, up from $1.6 million when it was introduced on 1 July 2017, and it's indexed upward in $100,000 increments in line with CPI over time.
Each person has their own personal transfer balance account, tracking credits when they start a retirement phase income stream and debits if they move money back out. Starting a pension uses up cap space, which you can check through ATO online services — the account shows how much of your personal cap remains available.
It's a lifetime limit, not an annual one, so once cap space is used it's gone unless the general cap is later indexed and you haven't fully used your own share of that increase. Exceeding your cap means commuting the excess back out and paying excess transfer balance tax — 15% for a first breach, 30% for later breaches — plus notional earnings on the excess. Because each partner in a couple has their own separate cap, a couple can move up to $4.2 million combined into the tax-free retirement phase, even though it can look like one household limit.
Example: a couple's combined transfer balance cap
Both partners start retirement phase income streams in 2026-27. Each has their own personal transfer balance cap of $2.1 million, so between them they can move up to $4.2 million total into the tax-free retirement phase.
If one partner tries to move $2.3 million into their own retirement phase account, the $200,000 excess breaches only their personal cap and has to be commuted back, regardless of how much unused cap space their spouse still has — the caps don't pool together.
Related Terms
Total Superannuation Balance
The total value of all your super interests across all funds, used to determine eligibility for various super concessions.
Preservation Age
The minimum age at which you can access your super savings, ranging from 55 to 60 depending on your date of birth.
Concessional Contributions
Before-tax super contributions taxed at 15% inside the fund, including employer SG, salary sacrifice, and personal deductible contributions.
Non-Concessional Contributions
After-tax super contributions that are not taxed inside the fund, with an annual cap of $130,000 (2026-27).
Self-Managed Super Fund (SMSF)
A private super fund you manage yourself, with up to 6 members, offering full control over investment choices.