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Recent developments

    Welcome to the October Adviser query of the month and technical briefing, an update of recent key technical developments for financial advisers for the period from 27 August 2025 to 26 September 2025.

    In this edition, the Adviser query of the month looks at the transfer balance cap (TBC) considerations when stopping a and starting account-based pensions (ABP) where the client has already maximised their TBC and their ABP has increased in value since commencement.

    Adviser query of the month

      Implications of increase to the deeming rates

      Question

      My client commenced an account-based pension (ABP) for $1.7 million in 2022-23, utilising their full transfer balance cap (TBC) in the process.

      The pension is now worth $2 million and we would like to recommend they commute their pension in full, rollover the benefits to a new fund and commence an ABP with the full rollover. They haven’t had any partial commutations to date.

      Will this cause them to exceed their transfer balance cap (TBC)?

      Answer

      As advisers are aware, the TBC is the maximum amount that individuals can move into the tax-free pension phase in the super environment. Each individual will have their own TBC, and these range from $1.6 million to $2 million.

      Amounts used to commence a pension create a credit, while commutations create a debit, in the individual’s transfer balance account.

      A positive design feature of the TBC rules is the ability for an individual’s transfer balance account to have a negative balance.

      The client’s transfer balance account position as a result of these transactions would be as follows:

      Swipe for more

      Financial year

      Transaction details

      Transfer balance account

      Credit/(Debit) $

      Running balance

      TBC

      (Under)/Over TBC

      2022-23

      Commencement - ABP 1

      $1,700,000

      $1,700,000

      $1,700,000

      $-

      2025-26

      Commutation of ABP 1

      ($2,000,000)

      ($300,000)

      $1,700,000

      ($2,000,000)

      2025-26

      Commencement ABP 2

      $2,000,000

      $1,700,000

      $1,700,000

      $-

      Caution

      In this scenario we’ve assumed that the recommendations result in a TBC debit and credit that equal one another. This may not be the case due to a number of circumstances, including:

      The rollover involves the in specie transfer of assets and the value of the assets increases from the point of commutation to the time the new income stream commences.

      1. In this scenario, if the assets were to increase by 1 per cent, the client would exceed their transfer balance cap by $20,000.
      2. The rollover involves cash however the funds sit in the accumulation phase in the new fund accruing interest before the new pension commences.
        The amount of interest is usually expected to be quite low and therefore any excess would consequently be quite low.

      Tips

      Ways to help minimise the impact of the circumstances above include:

      1. Administer the rollover in a way that minimises the time between commutation and commencement of the new pension
      2. If the transfer is to occur in multiple tranches, consider commencing the pension with the first tranche then use the pension update/refresh to start a new pension with the combined amount as each new rollover is received.
        A common example is where the rollover also involves the closure of an SMSF and there is a delay between the initial rollover and the next rollover as the accountant/administrator determines the amounts to transfer.
        Keep in mind that the pension update/refresh results in the existing pension being commuted and a new pension commencing. As such, a minimum pro rata pension is required before the pension is commuted unless the commencement and commutation are occurring in June of the same year.
      3. Closely monitoring transactions reported to the ATO and taking action to commute an excess as soon as possible. Unlike exceeding a contribution cap, the individual can rectify the excess before the ATO issues a determination.
        Remember that the amount that needs to be commuted to rectify the excess is the amount that exceeds the TBC plus a notional earnings amount (calculated using the ATO’s General Interest Charge rate) for the period they exceed their TBC.

      This query focused on ABPs which look at the closing and commencement values of the account when determining the respective transfer balance account debits and credits. Other types of income streams have alternative methodologies. Examples can be found in the ‘Capped defined benefit income streams’ section on page 62 in Macquarie’s Big Black Book.

      Legislative developments

      Opposition Bill to close the gender super gap

      On 4 September 2025 the Opposition introduced a Bill to the Senate aimed at closing the super gap that exists between genders.

      If legislated, the Bill will give spouses the opportunity to evenly split their super balances on an annual basis. It proposes that the spouse with the higher super balance will be able to top-up their spouse’s balance each year. The amount that can be split will be limited to the lower of the following:

      1. The general transfer balance cap
      2. An amount that results in spouses having equal balances

      The Explanatory Memorandum to the Bill provides the following two examples:

      Example 1

      If Person A has $5.5 million in their superannuation fund and Person B has $500K, Person A can roll over up to $1.5 million to Person B, bringing Person B’s balance up to $2.0 million (which is the general transfer balance cap for the current financial year).

      Example 2

      If Person A has $2 million in their superannuation fund and Person B has $500K, Person A can roll over up to $750K to Person B, bringing both balances to $1.25 million.

      It will not be available where:

      • A receiving spouse, at the time of the application:
        • Is 65 years old or older, or
        • Satisfies the retirement condition of release
      • The fund is a defined benefit scheme
      • The account is in the pension phase

      Further information can be found here: Superannuation Legislation Amendment (Tackling the Gender Super Gap) Bill 2025

      Consultations

      ASIC – Regulatory simplification report

      On 9 September 2025, ASIC released Report 813 Regulator simplification (REP 813), which explores ideas to simplify regulation and ease regulatory burden.

      At the start of 2025 ASIC established the ASIC Simplification Consultative Group, made up of business, consumers and industry leaders. The group is initially focused on areas that can make the most difference as quickly as possible for consumers, investors, businesses and directors.

      This report is seeking feedback in relation to the following topics:

      1. Improving access to regulatory information
      2. Reducing complexity in regulator instruments
      3. Making it easier to interact with ASIC
      4. Simplification through law reform

      Feedback is required by 15 October 2025.

      Further information can be found here: ASIC’s media release and REP 813

      Regulator developments

      Australian National Audit Office (ANAO)

      ATO and the regulation of self-managed superannuation funds (SMSFs)

      The ANAO has noted the possible audit of the effectiveness of the ATO in regulating SMSFs. A follow-up audit of employers meeting their superannuation guarantee requirements would also be conducted.

      The ANAO last audited the ATO in 2007 regarding their regulation of SMSFs and 2022 for Superannuation Guarantee non-compliance.

       Further information can be found here: ANAO Australian Taxation Office Regulation of Superannuation

      APRA

      Reminder for large super funds to report account balances

      The ATO has reminded large super funds to report 30 June 2025 account balances (and other amounts, such as notional taxed contributions and defined benefit contributions) by 31 October 2025 using the Member account transaction service (MATS).

      These super balances will later be included in the ATO’s MyGov linked portal and be used to determine an individual’s total superannuation balance, which is relevant for determining a number of advice related opportunities, such as:

      • The non-concessional contribution cap
      • The ability to use the carried forward concessional contribution cap,
      • Eligibility for the co-contribution and spouse contribution tax offset.

      Further information can be found here: Reporting account balances and other annual amounts

      ATO

      Reminder for SMSFs to report transfer balance account transactions

      The ATO has reminded SMSFs that they have until 28 October 2025 to report any transfer balance account events that occurred in the quarter from 1 July 2025 to 30 September 2025.

      SMSFs are required to report transfer balance account transactions by the 28th day after the quarter in which the transaction occurred whereas large super funds are required to report these transactions within 10 business days of the event. Awareness of these time frames is important when reviewing the ATO’s records when considering strategies that involve a client’s transfer balance cap.

      Further information can be found here: October quarterly TBAR lodgement reminder

      Downsizer contribution statistics

      On 16 September 2025 the ATO released its latest statistics regarding the use of the downsizer contribution.

      The data is based on the ATO’s records at 15 July 2025. As such, the figures for 2024-25 are likely to increase significantly as most SMSFs are yet to report their contribution information.

      The following table outlines the downsizer contribution data by year:

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      Financial year

      Total individuals

      Total contribution ($b)

      Average contribution per individual ($)

      2018–19

      6,500

      1.557

                         239,538

      2019–20

      10,700

      2.56

                         239,252

      2020–21

      13,000

      3.183

                         244,846

      2021–22

      19,700

      5.064

                         257,056

      2022–23

      15,900

      4.235

                         266,352

      2023–24

      16,900

      4.491

                         265,740

      2024–25

      15,800

      4.165

                         263,608

       

      The ATO’s page provides a lot of data including contribution levels based on state/territory, age and gender.

      Further information can be found here: Downsizer super contributions data.

      Important information

      This information is provided by Macquarie Investment Management Limited ABN 66 002 867 003 AFSL 237 492 (MIML or We). MIML is not an authorised deposit-taking institution for the purposes of the Banking Act 1959 (Cth), and MIML’s obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN 46 008 583 542, AFSL 237502. Any investments are subject to investment risk including possible delays in repayment and loss of income and principal invested. Macquarie Bank Limited does not guarantee or otherwise provide assurance in respect of the obligations of MIML.

      This information is provided for the use of financial services professionals only. In no circumstances is it to be used by a potential investor or client for the purposes of making a decision about a financial product or class of products.

      The information provided is not personal advice. It does not take into account the investment objectives, financial situation or needs of any particular investor and should not be relied upon as advice. Therefore, before acting on any information provided, the appropriateness of that information should be considered having regard to any objectives, financial situation or needs. Any examples are illustrations only and any similarities to any readers’ circumstances are purely coincidental.

      While the information provided here is given in good faith and is believed to be accurate and reliable as at the date of preparation, 26 September 2025, it is provided by MIML for information only. Neither MIML, nor any member of the Macquarie Group gives any warranty as to the reliability or accuracy of the information, nor accepts any responsibility for any errors or omissions. MIML does not accept any responsibility for information provided by third parties that is included in this document. We accept no obligation to correct or update the information or opinions in it. Opinions expressed are subject to change without notice. This information does not constitute legal advice and should not be relied upon as such. MIML will not be liable for any direct, indirect, consequential or other loss arising from reliance on this information.

      MIML does not give, nor purport to give, any taxation advice. The application of taxation laws to each client depends on that client’s individual circumstances. Accordingly, clients should seek independent professional advice on taxation implications before making any decisions about a financial product or class of products.

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