In our blog post titled, ‘once indexation starts, let the fund begin’ on 2 December 2019, we spoke about the potential for indexation of the general transfer balance cap (‘general cap’) where the CPI figure for December 2019 is 116.9 or higher. Well, the Australian Bureau of Statistics’ CPI figure released on 29 January 2020 fell short of this mark, being revealed at 116.2.
As a result of this data being released it now confirms that the indexation of the general cap will not occur from 1 July 2020, but will rather happen for the 2021-22 financial year. Interestingly, we could also see indexation of the concessional contribution cap in that financial year, an increment of $2,500 which is linked to AWOTE, not CPI. Where indexation of the concessional contribution cap occurs, this will have a flow-on effect to the non-concessional contribution (NCC) cap and operation of the bring forward provisions.
