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Indexation of contribution caps looking unlikely for FY23–24
While an increase in the general transfer balance cap on 1 July is now highly likely, the contribution cap thresholds are look likely to remain the same.
Speaking at a Heffron event last week, Heffron managing director Meg Heffron said given the recent rate of inflation, it is very likely the general transfer balance cap will jump to $1.8 million for the 2022–23 financial year.
“We’ve already had enough inflation for that to happen so it’ll have to increase to $1.8 million unless inflation [turns] negative. It could even go up to $1.9 million from 1 July 2023,” she explained.
The contribution caps, on the other hand are linked to average weekly earnings, she noted.
“At the moment, we haven't seen the same growth in average weekly earnings as we've seen in inflation. So far we haven’t seen enough growth in average weekly earnings to see the industry of the cap at 1 July 2023, and we may not see it depending on what happens with average weekly earnings over the next couple of months,” she stated.
“That would put us in the slightly unusual position that we’d see the thresholds go up, but no change in caps.”
Ms Heffron said the convenient thing about the last increase at 1 July 2021 is that the thresholds and contributions caps increased at the same time.
“So we went from having one series of thresholds and caps to another rather than more subtle tweaks to that several years in a row,” he said.
“We may see that over the next couple of years.”
Miranda Brownlee
Miranda Brownlee is the deputy editor of SMSF Adviser, which is the leading source of news, strategy and educational content for professionals working in the SMSF sector.
Since joining the team in 2014, Miranda has been responsible for breaking some of the biggest superannuation stories in Australia, and has reported extensively on technical strategy and legislative updates.
Miranda also has broad business and financial services reporting experience, having written for titles including Investor Daily, ifa and Accountants Daily.
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