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Tax relief for individuals

The Federal Budget for 2020 announced personal and business tax relief through various tax cuts. The legislation was approved by parliament meaning that individuals and businesses will be paying less tax, and have more money to invest and spend into the economy.

For individuals, the government has brought forward tax cuts which were initially planned for 2022, now they will be backdated to July 2020. These cuts are set to amount to $17.8 billion and will assist low to middle income earners.

What are the specifications?

Therefore, depending on which bracket an individual falls under, they will receive tax cuts as well as a one-off payment. These payments can vary from $510 to $2745 depending on which bracket the individual falls into. However, if their income is higher than $126,000, then they will not receive the one-off benefit.

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What is the transfer balance cap?

February 18, 2021

The transfer cap refers to the amount of money that can be transferred from your superannuation account to your tax-free ‘retirement phase’ account.

At the moment, the transfer balance cap is $1.6 million and all individuals have a personal transfer balance cap of $1.6 million.

Exceeding the personal transfer balance cap means that you have to:

The amount in your retirement phase account may grow over time, due to investment earnings. Although this may grow beyond the personal transfer cap, you will not exceed the cap. However, if you have already used all your personal cap, and then your retirement phase account goes down, you cannot ‘top it up’.

The rules applied to capped defined benefit income streams are different from other income streams – this is because you can’t usually transfer or commute excess amounts from other streams.