On July 1, 2025, the maximum amount that can be transferred to a tax-free retirement account increases to $2 million.

The transfer balance cap, or the amount that can be moved to a tax-free retirement account, is determined by the Consumer Price Index (CPI), which is released each December. If inflation rises, the general transfer balance cap (TBC) is increased by $100,000 at the start of each fiscal year.

The threshold was raised from $1.9 million to $2 million in December 2024 to account for inflation.

Everyone has a transfer balance cap. When indexation occurs, any increase affects solely your unused transfer balance cap if you have already started a retirement income stream. 

If you’re considering retiring, indexing the transfer balance cap provides a one-time opportunity to increase the amount of money you can contribute to your tax-free retirement plan, either entirely or partially. In other words, if you start receiving a retirement income stream for the first time in June 2025, your transfer balance ceiling will be $1.9 million, but if you wait until July 2025, it would rise to $2 million, saving you $100,000 in tax free cap.

If you already receive a retirement income stream, you may not receive the whole $100,000 increase on July 1, 2025, because indexation applies to any unused TBC.

Contact Bates Cosgrave anytime if you have any question related to super fund contribution, tax or payments.