How does a reversionary pension affect TBA, TSB and the new $3M Division 296 rules?

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KaraATO · Accepted Answer

- we'd heard back from our subject matter experts. The value of your reversionary super income stream is calculated at the time you first become entitled to payments from it. This is usually the date of death of the original member. A credit arises in your transfer balance account for this value, 12 months after the date of death. The Fund will report this to us once you become eligible to receive it. The 12-month delay is a legislated concession to: - give the beneficiary time to review their transfer balance cap position, and - make any necessary adjustments (for example, commuting other pensions) so as their transfer balance account will remain under the cap. From 1 July 2026, Division 296 tax will be imposed on the proportion of your earnings relating to your TSB that exceeds the large super balance threshold which is set at $3 million for the 2026-27 financial year. For further info, you can read through the current info on our ATO website: - transfer balance account (https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/retirement-withdrawal-lump-sum-or-income-stream/transfer-balance-account) - Superannuation death benefits (https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families/super/withdrawing-and-using-your-super/superannuation-death-benefits), and - better targeted superannuation concessions (https://www.ato.gov.au/about-ato/new-legislation/in-detail/superannuation/better-targeted-superannuation-concessions).

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