The super changes coming into effect in the 2025-26 financial year
Australian superannuation laws are set to change once again in the 2025-26 financial year as the nation’s fast-growing retirement savings system continues to evolve.
Below is a summary of the changes that will come into effect from 1 July, 2025, as well as looming legislative changes.
Increased super guarantee (SG)
Millions of working Australians will receive a welcome superannuation boost from the start of July when the mandatory superannuation guarantee (SG) rate rises by 0.5% to 12%.
The SG is the percentage of your ordinary time earnings (in addition to wages) that is paid into your super fund account by your employer.
The 2025-26 rise marks the end of a series of five 0.5% SG rate increases since the start of the 2021-22 financial year, when the SG rate was lifted from 9.5% to 10%.
Higher transfer balance cap
Individuals starting a pension for the first time on or after 1 July 2025 will be entitled to a personal transfer balance cap (TBC) of $2 million, which will be increased by $100,000 from the current level of $1.9 million.
The TBC is the maximum amount that an individual can transfer from their superannuation accumulation account into a tax-free pension account on their retirement. Any amount over the TBC must be retained in an accumulation account, where any contributions and investment earnings are still taxed at 15%.
Keep in mind that investment earnings within the pension account can increase the account balance above the $2 million transfer balance cap without any penalty.
Carry-forward concessional contributions
Eligible workers can “carry forward” any of their unused annual concessional super contribution cap amounts from up to five financial years ago and add them to their concessional contribution cap in the current financial year.
That means it may be possible to contribute more than the current $30,000 concessionally taxed limit, subject to you having a total super balance of less than $500,000 at 30 June of the previous financial year and you having unused concessional contributions cap amounts available.
From 1 July the starting financial year for carry forward amounts will roll over to 2020-21. As such, the deadline for taking advantage of any unused entitlements you may have from the 2019-20 financial year will end on 30 June.
Proposed higher taxes on $3 million-plus super balances
Following its recent re-election, the federal government is likely to reintroduce its Division 296 tax bill to be passed as legislation.
The proposed Division 296 legislation would introduce an additional 15% tax on the earnings of super funds with balances above $3 million (which would apply to earnings on any amounts over $3 million). This would include any unrealised gains on assets held inside a super fund, such as shares and property, even if they had not been sold.
