Law Companion Ruling LCR 2016/9A5

What this ruling is about: Omit the preamble; substitute: 2. Table of Contents Omit the Table of Contents; substitute: 3. Paragraph 1 Omit 'two'; substitute '2'. 4. Paragraph 5 (a) Omit 'following new concepts'; substitute 'following concepts'. (b) Omit 'transfers and/or commutations on your transfer balance'; substitute 'transfers, commutations, or both, on your transfer balance'. 5. Paragraph 6 In footnote 1, after 'Refer to', insert 'Law Companion Rulings'. 6. Paragraph 7 (a) After 'All legislative references', insert 'in this Ruling'. (b) After the paragraph, insert new paragraph 7A, including heading: 7. Paragraph 8 Omit 'balance account, 2 transfer balance, 3 '; substitute 'balance account 2 , transfer balance 3 ,'. 8. Paragraph 11A Omit 'at that time, 7 '; substitute 'at that time 7 ,'. 9. Paragraph 13 (a) After the paragraph, insert new paragraph 13A: (b) In new paragraph 13A, after 'Commissioner' insert new footnote 13A : (c) In new paragraph 13A, after 'authority is issued' insert new footnote 13B : (d) In new paragraph 13A, after 'later income year).' insert new footnote 13C : 10. Paragraph 15 Omit 'A transition to retirement'; substitute 'Further, a transition to retirement'. 11. Paragraph 17 (a) After the paragraph, insert new paragraphs 17A to 17O, including headings: (b) In new paragraph 17A, after 'general transfer balance cap.' insert new footnote 20A: (c) In new paragraph 17B, after 'unused cap percentage is worked out by', insert new footnote 20B: (d) In new paragraph 17C, after 'taken to be 100%.', insert new footnote 20C: 12. Paragraph 30 Omit the wording of the paragraph, including the table; substitute: 13. Paragraph 30A (a) Omit 'commenced'; substitute 'commences'. (b) After 'On 1 July 2017', insert a comma. 14. Paragraph 30C After 'superannuation income streams in the retirement phase', insert a comma. 15. Paragraph 31 Omit the wording of footnote 27A; substitute: 16. Paragraph 32A After 'entitled to the superannuation income stream', insert a comma. 17. Paragraph 34A Omit 'LCR 2017/3 Superannuation reform: Superannuation death benefits and the transfer balance cap'; substitute 'Law Companion Ruling LCR 2017/3 Superannuation reform: Superannuation death benefits and the transfer balance cap'. 18. Paragraph 39A Omit 'less than 5 members'; substitute 'less than 7 members'. 19. Paragraph 39B Omit 'the refinanced LRBA is secured by the same asset/s as the original LRBA; and'; substitute 'the refinanced LRBA is secured by the same assets as the original LRBA, and'. 20. Paragraph 39E Omit 'See examples'; substitute 'See Examples'. 21. Paragraph 39J Omit the wording of the paragraph; substitute: 22. Paragraph 39K Omit 'to example 2A, on 1 April 2019'; substitute 'to Example 2A of this Ruling, on 1 April 2019,'. 23. Paragraph 39N Omit the wording of the paragraph; substitute: 24. Paragraph 40 (a) Omit the wording of the paragraph; substitute: (b) Omit footnote 33. (c) Omit the wording of footnote 34; substitute: (d) After 'subsection 294-80(1) do not apply', insert new footnote 34A: (e) Omit the wording of footnote 35A; substitute: 25. Paragraph 41 (a) Omit 'A commutation also occurs'; substitute 'A commutation will have occurred'. (b) Omit the wording of footnote 36; substitute: 26. Paragraph 42 Omit the wording of footnote 37; substitute: 27. Paragraph 43 Omit 'and due to processing times'; substitute 'and, due to processing times,'. 28. Paragraph 44 Omit 'as mentioned above'; substitute 'as mentioned in subparagraphs (a) and (b)'. 29. Paragraph 45 Omit 'to be notified, 42 '; substitute 'to be notified 42 ,'. 30. Paragraph 46A and 96 Omit 'income stream/s'; substitute 'income stream or streams'. 31. Paragraph 47 Omit 'court ordered structured'; substitute 'court-ordered structured'. 32. Paragraph 51A After 'Example 3', insert 'of this Ruling,'. 33. Paragraph 51G After 'In some circumstances', insert a comma. 34. Paragraph 51H Omit the wording of footnote 42D; substitute: 35. Paragraph 52 Omit 'a superannuation income stream'; substitute 'an income stream'. 36. Paragraph 55 Omit the wording of the paragraph; substitute: 37. Paragraph 55A and 55G Omit 'commenced'; substitute 'commences'. 38. Paragraph 55E and 55J Omit 'mean'; substitute 'means'. 39. Paragraph 55K (a) After the paragraph, insert new paragraphs 55L to 55R, including headings: (b) In new paragraph 55L, after 'original superannuation fund.' insert new footnote 44B: (c) In new paragraph 55N, after 'transferred members will cease.' insert new footnote 44C: (d) In new paragraph 55N, after 'income stream just before it ceased.' insert new footnote 44D: (e) In new paragraph 55O, after 'new superannuation income stream.' insert new footnote 44E: (f) In new paragraph 55O, after 'income interest that supports it at that time.' insert new footnote 44F: 40. Paragraph 61B Omit the wording of footnote 52; substitute: 41. Paragraph 61C Omit 'is the later of: 53 '; substitute 'is the later of 53 :'. 42. Paragraph 68C Omit the wording of the paragraph, including the tables; substitute: 43. Paragraph 70 Omit the wording of footnote 56; substitute: 44. Paragraph 72 Omit 'balance cap ($1.6 million)'; substitute 'balance cap (the relevant transfer balance cap for the transitional period was $1.6 million)'. 45. Paragraph 74 Omit 'six month'; substitute '6-month'. 46. Paragraph 76A (a) Omit 'income stream/s'; substitute 'income stream or streams'. (b) Omit 'initially and/or at the end of 31 December 2017'; substitute 'initially, at the end of 31 December 2017, or both'. 47. Paragraph 93 (a) Omit 'stream provider/s'; substitute 'stream provider or providers'. (b) Omit 'income stream/s'; substitute 'income stream or streams'. 48. Paragraph 97 After 'in accordance with this section', insert a comma. 49. Paragraph 98 Omit 'three week', insert '3-week'. 50. Paragraph 100 (a) Omit 'stream provider/s'; substitute 'stream provider or providers'. (b) After 'excess transfer balance tax', insert a comma. This Addendum applies from both before and after its date of issue, subject to the commencement and application of each Act to which it refers. Commissioner of Taxation 15 July 2026 © AUSTRALIAN TAXATION OFFICE FOR THE COMMONWEALTH OF AUSTRALIA You are free to copy, adapt, modify, transmit and distribute this material as you wish (but not in any way that suggests the ATO or the Commonwealth endorses you or any of your services or products).






This Addendum is a public ruling for the purposes of the Taxation Administration Act 1953 . It amends Law Companion Ruling LCR 2016/9 to: | LCR 2016/9 is amended as follows: | To the extent it is a public ruling, if this Ruling applies to you, and you correctly rely on it in good faith, we will apply the law to you in the way set out in this Ruling. That is, you will not pay any more tax or penalties or interest in respect of the matters covered by this Ruling. | Statements about excess transfer balance tax are not legally binding on the Commissioner. However, if you act in accordance with the view expressed in good faith, the Commissioner will endeavour to stand by these statements in applying the law. | What this Ruling is about | Transfer balance account and transfer balance cap | General transfer balance cap and personal transfer balance cap | Example A1  Personal transfer balance cap proportional indexation | Example A2  Personal transfer balance cap not entitled to indexation | When debits and credits do not arise in your transfer balance account | Example 1  Transfer balance account credits and debits | Example 1A  TRIS in the retirement phase on 1 July 2017 | Example 1B  TRIS in the retirement phase after 1 July 2017 | Credits that arise in your transfer balance account | Credit amounts for reversionary beneficiary and death benefits | Example 2  Reversionary beneficiary | Credit amounts for payments under certain limited recourse borrowing arrangements | Example 2A  LRBA  apportionment of credit | Example 2B  Apportionment of credit  payment after partial commutation | Debits that arise in your transfer balance account | Alternative debit amount for structured settlement contributions made before 1 July 2017 | Example 3  Structured settlement | Example 3A  Alternative debit amount | Assumptions for transfer balance account and transfer balance | Superannuation income streams that fail to comply with the standards | Example 3B  Failure to make minimum payment in income year | Example 3C  Failure to make minimum payment before commutation | Example 3D  Successor fund transfer  cessation of a superannuation income stream | A non-commutable excess transfer balance | Debits that you must notify us about in the approved form | Payment splits: divorce or relationship breakdown | Example 4  Payment splits | Excess transfer balance determinations | Default commutation notice | 7A. This Ruling applies both before and after the date of issue, subject to the commencement and application of each Act to which it refers. | 13A See Subdivision 136-B of Schedule 1 to the Taxation Administration Act 1953 (TAA) and paragraph 307-80(4)(a). | 13B See section 136-80 of Schedule 1 to the TAA and paragraph 307-80(4)(b). | 13C Paragraph 307-80(4)(c). | 17A. Your personal transfer balance cap will be proportionally indexed based on the highest balance of your transfer balance account. The amount by which your personal transfer balance cap is increased is worked out by multiplying your 'unused cap percentage' by the 'indexation increase' of the general transfer balance cap. 20A | 17C. However, if the highest transfer balance in your transfer balance account at the end of any day up to the end of the previous financial year is less than nil, then the unused cap percentage is taken to be 100%. 20C | 17D. Ryuk commences a superannuation income stream on 1 March 2018 valued at $1.4 million. His transfer balance account commences on this date and is credited with $1.4 million. | 17E. Ryuk's personal transfer balance cap is equal to the general transfer balance cap for the financial year in which the account commenced, which is $1.6 million. Ryuk has a transfer balance of $1.4 million and available cap space of $200,000. No further credit or debit events occur in Ryuk's transfer balance account at this time. | 17F. On 1 July 2021, the general transfer balance cap is increased as a result of indexation by $100,000 to $1.7 million. Ryuk's personal transfer balance cap is indexed proportionally, based on his remaining cap space. | 17H. On 1 July 2021, Ryuk's personal transfer balance cap is indexed to $1.613 million. Ryuk has available cap space of $213,000, being the difference between Ryuk's indexed personal transfer balance cap of $1.613 million and his transfer balance of $1.4 million. | 17I. On 31 December 2022, Ryuk commenced another superannuation income stream. The value of the superannuation interest that supports this new income stream is $125,000. Ryuk's transfer balance account is credited with $125,000, taking his transfer balance to $1.525 million. | 17J. On 1 July 2023, the general transfer balance cap is increased again due to indexation, this time by $200,000 to $1.9 million. Ryuk's personal transfer balance cap is indexed proportionally, based on his remaining cap space. | 17L. On 1 July 2023, Ryuk's personal transfer balance cap is indexed by a further $12,000 to $1.625 million ($1.613 million + $12,000 = $1.625 million). Ryuk now has available cap space of $100,000, being the difference between Ryuk's further indexed personal transfer balance cap of $1.625 million and his transfer balance of $1.525 million. | 17M. Using Example A1 of this Ruling, except Ryuk's superannuation income stream is instead valued at $1.6 million, Ryuk's transfer balance account commences on 1 March 2018 and is credited with $1.6 million. | 17N. Ryuk's personal transfer balance cap is equal to the general transfer balance cap for the financial year in which the account commenced, which is $1.6 million. | 17O. On 1 July 2021, although the general transfer balance cap is increased to $1.7 million, Ryuk's personal transfer balance cap will remain at $1.6 million. He is not entitled to indexation on 1 July 2021 (or any future indexation of the general transfer balance cap) because his transfer balance equalled his personal transfer balance cap. | 20A See subsection 294-40(2). | 20B See subsection 294-40(2). | 20C Subsection 294-40(3). | Figure 1 of this Ruling details Darius's transfer balance account and the debits and credits arising from the transactions detailed in paragraphs 26 to 29 of this Ruling. | 27A. Item 4 of the table in subsection 294-25(1) and section 294-55. | The transfer balance credits that arise in Ram and Madhu's transfer balance account on 1 September 2018, is apportioned in a fair and reasonable manner in accordance with the proportion of their retirement phase interests in the SMSF. This is calculated as follows: | The transfer balance credit that arises in Ram and Madhu's transfer balance accounts are calculated as follows: | 34. Item 5 in the table in subsection 294-80(1). | 34A. Item 6 in the table in subsection 294-80(1). | 35A. Item 8 in the table in subsection 294-80(1). | 36 Refer to paragraph 110 of TR 2013/5. | 37 Amendments were made to regulations 1.05, 1.06, 1.07A, 1.07C and 1.07D of the Superannuation Industry (Supervision) Regulations 1994 and regulations 1.07, 1.08 and 1.08A of the Retirement Savings Accounts Regulations 1997 by the Treasury Laws Amendment (Fair and Sustainable Superannuation) Regulations 2017 so that partial commutations will not count towards the minimum annual payment requirement for superannuation income streams. | 42D. Paragraphs 18 to 20 of TR 2013/5. | A debit arises in the individual's transfer balance account at the time the income stream stops being a superannuation income stream in the retirement phase. 44 The value of the debit is the value of the superannuation interest that supports the income stream just before the time the income stream stops being a superannuation income stream. No further transfer balance debit will arise if that income stream subsequently ceases (for example, by commutation), as it has already ceased to be a superannuation income stream that is in the retirement phase. If a new superannuation income stream is commenced to replace the superannuation income stream that failed to meet the standards it will give rise to a credit in the recipient's transfer balance account. | 55L. A successor fund transfer will occur where a fund trustee chooses to transfer members to a new (successor) fund. It can occur without the members' consent but requires the member to have equivalent rights in the new superannuation interest with the successor fund as they had in the original superannuation fund. 44B | 55M. Where a successor fund transfer occurs it will impact the transfer balance account for any member who was receiving a superannuation income stream from an interest in the transferring fund. | 55N. After the transfer, the trustee of the original fund will no longer have any liability to pay superannuation income stream benefits to the transferring members, and any superannuation income streams that were being paid to transferred members will cease. 44C A debit will arise in the recipient's transfer balance account at the time the income stream ceases, equal to the value of the superannuation interest that supported the income stream just before it ceased. 44D | 55O. If the trustee of the successor fund is required to pay a superannuation income stream to a transferred member, it will be a new superannuation income stream. 44E Generally, a credit will arise in the recipient's transfer balance account at the time it starts, equal to the value of the superannuation income interest that supports it at that time. 44F | 55P. Twice Super and Mika Super funds have agreed to enter a successor fund transfer under which the benefits of members of Twice Super will be transferred to Mika Super. | 55Q. A Deed is prepared by the parties setting out the obligations of both parties under the successor fund transfer. This includes Mika Super providing equivalent superannuation income streams (in the form of account-based pensions) to those currently payable to members of Twice Super. The Deed specifies the transfer will occur on 1 August 2023. | 44B. 'Successor fund' is defined in subsection 995-1(1). See also section 306-12 for involuntary roll-over superannuation benefits. | 44C. See paragraphs 28A to 28C of TR 2013/5. | 44D. Item 6 in the table in subsection 294-80(1). | 44E. See paragraph 120E of TR 2013/5. | 44F. Item 2 in the table in subsection 294-25(1). However, for capped defined benefit income streams, the value of the credit for the new superannuation income stream is equal to the value of the debit that arose when the superannuation income stream in the original fund ceased  see subsection 294-25.03(2) of the Income Tax Assessment (1997 Act) Regulations 2021. | 52. Subsection 294-90(2). | Justin, however, is not eligible to increase his transfer balance cap by indexation in future years as his transfer balance was equal to his transfer balance cap in the past. | 56. Modified rules apply in determining excess transfer balance for individuals who are receiving capped defined benefit income streams and child recipients of death benefit income streams. Refer to LCR 2016/10 and LCR 2017/1 for further guidance on these rules.