The Transfer Balance Cap (TBC) was introduced in 2017. Trustees of self-managed super funds (SMSF) are required to report how much of your super has been allocated to start a pension. The TBC is a “cap” on the amount any individual can have in pension phase. The Australian Taxation Office (ATO) source details from all of an individual’s super balances including SMSFs, industry funds, retail funds, public sector and corporate funds. Only transactions in relation to retirement phase pensions are reportable. A Transition to Retirement Income Stream (TRIS) is not in retirement phase therefore is not reportable.
Special rules apply to capped defined benefit income streams.
How much is the General Transfer Balance Cap (TBC)?
Based on the release of CPI data the TBC from 1st July 2026 should increase to $2.1million but the ATO has not formally confirmed it at the date of writing this article (4/2/2026).
| Date of indexation | General TBC |
| 1 July 2026 | $2.1 million |
| 1 July 2025 | $2 million |
| 1 July 2023 | $1.9 million |
| 1 July 2021 | $1.7 million |
| 1 July 2017 (start date) | $1.6 million |
Is the TBC the same as a member’s Total Super Balance (TSB)?
Often, people get confused between the TBC and a member’s Total Super Balance (TSB) due to the general TBC being used for some other superannuation measures.
Hint – A member’s Total Super Balance (TSB) measures the total value of super an individual has in the superannuation system. It typically includes a member’s accumulation balance and the value of your retirement phase pensions across all super interests.
Is the Transfer Balance Cap (TBC) indexed?
Yes, it is indexed in $100,000 increments based on inflation. Each pension member has a personal TBC. An individual’s personal TBC is the same as the general TBC when they first start a pension. However, their personal TBC can be adjusted to include part of future indexation in relation to the proportion of the cap already used.
Example 2– Similar facts as example 1 except Todd starts a pension with $1million on the 20th June 2025. He can access part of the indexed amounts in the future.
100% -($1mil/$1.9mil) = 47%
Todd’s personal TBC at 1 July 2026 is $1.9 + (47% x $200,000) = $1,994,000
Todd’s transfer balance account included a credit of $1million. Therefore, he can start a new pension up to $994,000 after 1 July 2026.
Your personal TBC can be complex to calculate but you don’t need to do this as the ATO tracks the movements in your Transfer Balance Account and can provide you with your personal TBC online via myGov.
What counts towards my Transfer Balance Cap (TBC)?
The following events are required to be reported in a transfer balance account report (TBAR) to the ATO:
- commencement of a retirement phase income stream
- part or full commutation of a retirement phase income stream including stopping a pension, when a member ceases the pension and rolls it back into accumulation phase or simply taking a lump sum payment from the pension capital
- death benefit income streams – these pensions are quarantined and kept separate to other pension balances
- comply with a commutation authority – the ATO notifies a member when they exceed their TBC
What doesn’t count towards my TBC?
The following events are not reportable and do not count towards an individual’s TBC:
- pension payments – payments made from a member’s pension account are pension payments and not reportable unless a member formally requests it to be a lump sum payment which is a partial commutation and a reportable event
- a pension account which is fully drawn down due to pension payments being made exhausting the pension balance
- the balance of a pension on the death of a member – however if s then paid to a surviving spouse or other pension beneficiary as a death benefit pension or a reversionary pension the new pension is reportable
- investment earnings and losses do not add to or takeaway from a member’s TBC
Other reportable events
When you are in receipt of a retirement phase income stream other events are reportable using a Transfer balance event notification and not the usual TBAR include:
- a family law payment split
- money withdrawn from a pension account due to fraud, dishonesty or bankruptcy
- structured settlement contributions made before 1 July 2007
Special rules in counting TBC in relation to a Capped Defined Benefit Income Stream
Prior to 1st July 2017 an SMSF could provide defined benefit pensions, generally a market-linked pension or a lifetime pension. These pensions are known as ‘capped defined benefit income streams’. The pension will count towards a member’s TBC but a special value is assigned by annualising the first pension payment and multiplying by 16 if a lifetime pension or by the remaining term if a market-linked pension.
How does the Transfer Balance Account work (TBA)?
Trustees of SMSFs and other types of super funds report events to the ATO in a Transfer Balance Account Report (TBAR) which is reported within 28 days after the end of the quarter in which the event occurred i.e. a new pension started on 1st May 2025 and must be reported by 28th July 2025. The ATO keep track of the events by recording transfers into and out of retirement phase as credits or debits. Typically, credits include the value of new income streams and debits represent commutations of the pension.
| Date | Transaction | Debit | Credit | Transfer Balance |
| 10th July 2024 | Start superannuation income stream | $1,500,000 | $1,500,000 | |
| 1st May 2025 | Member commutation | $300,000 | $1,200,000 | |
| 15 Nov 2025 | Start superannuation income stream | $721,000 | $1,921,000 |
Percentage of indexed amount is 100%-($1.5mil/$1.9mil) = 21%
Personal TBC at 15 Nov 2025 – $1.9mil + ($100,000 x 21%) = $1,921,000
New pension that can be taken on 15 Nov 2025 – $1,921,000 – $1,200,000 – $721,000
Special rules for reporting a Death Benefit Income Stream (DBIS)
A death benefit income stream inherited by a member is a reportable event which increases the member’s TBC.
Reversionary death benefit pension recipient
The pension from the deceased automatically passes to the pension beneficiary which is generally the surviving wife or husband.
The value of the death benefit pension is determined at the date of death and is recorded in the beneficiary’s Transfer Balance Account 12 months after the death allowing time for the beneficiary to adjust their account if required.
Hint – The value of the death benefit pension must be notified to the ATO in a TBAR within 28 days after the end of the quarter in which the member died even though the pension value is not recorded in the beneficiary’s account until 12 months after the member’s death.
Non-Reversionary death benefit pension recipient
A death benefit should be paid as soon practicable. Historically, the ATO have taken the view that six months is a reasonable timeframe but recently the ATO have dropped this from their website. Particularly for an SMSF the surviving member is generally a spouse who may not have been involved in the day-to-day operations of the fund and given that they are grieving it may take some time to seek advice about the death benefit payment.
The value of the death benefit pension is determined at the time the pension starts and not at the time of the member’s death. It is reportable in a TBAR in relation to the quarter the pension is commenced.
Example 1 – Reversionary Pension Beneficiary
Tom and Edith have a SMSF and nominated each other as a reversionary pension beneficiary on their account-based pensions. They both started pensions with a value of $1.9 million on 1 July 2023. Tom passes away on 30th January 2026. There have been no other transactions recorded in their TBA apart from the commencement of their pensions. The value of Tom’s pension account on 30th January 2026 was $1.5 million which is automatically reverted to Edith.
The SMSF trustee must report the value of the reversionary pension of $1.5million transferred to Edith in a TBAR by 28th April 2026. It is not recorded in Edith’s TBC until the 30th January 2027. If Edith does nothing her TBA is calculated as follows:
| Date | Transaction | Debit | Credit | Transfer Balance |
| 1st July 2023 | Start ABP | $1,900,000 | $1,900,000 | |
| 30th January 2027 | Reversionary Death benefit pension | $1,500,000 | $3,400,000 |
As Edith used the full amount of her personal TBC when she started her pension she cannot access any of the future indexation. She can commute $1,500,000 from her ABP to allow room for the reversionary death benefit pension before the 30th January 2027 to avoid excess TBC.
Example 2 – Non-Reversionary Pension Beneficiary
The same facts as example 1 but Edith is not a reversionary pension beneficiary. She will be the recipient of a new death benefit pension starting on the 1st June 2026 with a balance of $1.7 million. As Edith has used all of her TBC she has no access to the indexation. Edith can commute $1.7million from her ABP to allow for the death benefit pension. The SMSF trustee has to report the commencement of the death benefit pension and the commutation of her ABP in a TBAR by 28th July 2026.
What happens if I exceed my TBC?
If you exceed your personal TBC, the ATO will issue an excess transfer balance determination stating how much of your pension must be commuted and estimating earnings on the excess. It will also specify the deadline for commutation. If not fixed by then, the SMSF trustee gets a commutation authority, and extra penalties and interest may apply.