Transfer Balance Cap

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 2025–26, the general transfer balance cap is $1.9 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 $3.8 million in the tax-free retirement phase (2 × $1.9 million). This is a key consideration for estate and retirement planning.