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.
Author: Aaron Dunn
Aaron is a well-known identity within the SMSF sector and is seen as a trusted source for professionals to learn more about SMSFs and the direction of the sector. Aaron's insights into both technical and practice-based issues within the SMSF industry sees him regularly sort out to participate as a key stakeholder across regulatory and policy issues.
Aaron was awarded the SMSF Association Chairman's Award 2023 for his outstanding contribution to the SMSF sector, having made a significant contributions to sector growth and sustainability, measured against the values of leadership and sustainability.
As an SMSF specialist and CPA with more than 25 years experience, Aaron is the CEO and Co-founder of Smarter SMSF, a specialist business that provides technology-based solutions to educate, automate and simplify the complexities of SMSFs to accountants, financial advisers.
A lover of sport, in particular AFL football (Essendon) and athletics, Aaron was previously a nationally ranked high jumper having set a personal best jump of 2.14m.
