The super changes coming into effect in the 2025-26 financial year
Australian superannuation laws changed 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 came into effect on 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 with the mandatory superannuation guarantee (SG) rate rising 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 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 ended 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.
Source: Vanguard
This article has been reprinted with the permission of Vanguard Investments Australia Ltd. Copyright Smart Investing™
Important:
Any information provided by the author detailed above is separate and external to our business and our Licensee. Neither our business nor our Licensee takes any responsibility for any action or any service provided by the author. Any links have been provided with permission for information purposes only and will take you to external websites, which are not connected to our company in any way. Note: Our company does not endorse and is not responsible for the accuracy of the contents/information contained within the linked site(s) accessible from this page.
Any advice in this publication is of a general nature only and has not been tailored to your personal circumstances. Please seek personal advice prior to acting on this information. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue. In some cases the information has been provided to us by third parties. While it is believed the information is accurate and reliable, this is not guaranteed in any way. Opinions constitute our judgement at the time of issue and are subject to change. Neither, the licensee or any of the Infinity group of companies, nor their employees or directors give any warranty of accuracy, nor accept any responsibility for errors or omissions in this document. Before making a decision to acquire a financial product, you should obtain and read the product disclosure statement (pds) relating to that product. Past performance is not a reliable guide to future returns. The information in this document reflects our understanding of existing legislation, proposed legislation, rulings etc as at the date of issue.
