Be Superannuation-ready for FY26

With 1 July upon us, several significant superannuation changes will come into effect. From increased SG contribution limits to the introduction of Division 296, here’s what you need to know to prepare.

Super Guarantee rate increase

The Superannuation Guarantee rate will increase from 11.5% to 12% for employees on 1 July 2025.

Contribution limits for FY26

The contribution caps for FY26 remain unchanged from FY25:

• Concessional Contributions (pre-tax):
  $30,000 per annum
  Includes employer SG contributions, salary sacrifice, and personal deductible contributions.
• Non-Concessional Contributions (after-tax):
  $120,000 per annum
  Individuals under the ag of 75 (at any time in the financial year) may be eligible to trigger the bring-forward rule, allowing up to $360,000 over three years, subject to your Total Super Balance (TSB).

These caps were indexed from 1 July 2024 and are expected to remain static until the next indexation trigger is met.

Total Super Balance (TSB) & Transfer Balance Cap (TBC) indexation

From 1 July 2025:

• The Total Super Balance threshold relevant for contribution eligibility and bring-forward rules will increase from $1.9 million to $2.0 million.
• The General Transfer Balance Cap (TBC) - the cap on the amount that can be transferred into tax-free retirement phase pensions - will also increase from $1.9 million to $2.0 million.

Individual TBCs will be indexed proportionally based on the amount previously used. If you have previously commenced a retirement phase income stream, your personal cap may vary.

Division 296 tax

The proposed Division 296 tax remains draft legislation. However, given Labor’s recent election win, we expect the legislation to pass. If passed in its current form, it would introduce an additional 15% tax on earnings corresponding to the portion of your Total Super Balance exceeding $3 million, starting from 1 July 2025.

Key points to consider:

• This applies only to individuals with a Total Super Balance over $3 million.
• It is calculated on an adjusted earnings formula, not actual realised income.
• The tax will be levied outside the superannuation fund, and members will have the option to release funds from super to pay the liability.

We are monitoring the legislative progress and will provide further updates once the bill is passed.

We’re here to help

If you believe our specialised Superannuation team can help you or your client, please contact us on 03 8508 7800 or submit your details here and we’ll contact you.

 

This information is general in nature and is provided by Partners Wealth Group. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.