Our previous post detailed how contributing just $20 a week to your super can yield an extra $80K in your pocket come retirement! If you missed it, you can check it out here.
Yet, there’s more!
On July 1st, some important changes will be made to Superannuation.
We have summarised the changes in one handy post for all you need to know.
Australia’s superannuation system is about to undergo another round of changes as the 2025–26 financial year approaches. The changes are designed to strengthen the average Aussie’s retirement so we can all enjoy a comfortable and financially happy retirement.
Key super changes taking effect from 1 July 2025
-
Super Guarantee to increase to 12%
From 1 July 2025, the compulsory Super Guarantee (SG) rate will increase by 0.5%, bringing it to 12% of your ordinary time earnings.
This marks the final step in a five-year plan to gradually lift the SG rate from 9.5% in 2020–21 to its legislated target of 12%. For workers, this means more money going into your super fund and greater retirement savings.
-
Transfer balance cap increases to $2 million
If you’re planning to start a retirement income stream from your super after 1 July 2025, you’ll benefit from a higher Transfer Balance Cap (TBC), increasing from $1.9 million to $2 million.
The TBC limits how much you can transfer into a tax-free pension account from your accumulation account when you retire. Any funds exceeding the cap must remain in your accumulation account, where earnings are taxed at 15%.
Important: if your pension account grows beyond the $2 million cap due to investment returns, you won’t be penalised.
-
Last Chance to Use Unused Concessional Contributions from 2019–20
The carry-forward concessional contributions rule allows you to use any unused portion of your annual concessional cap from the past five years to boost your super balance for those with a super balance under $500,000 as at 30 June of the previous financial year.
From 1 July 2025, you’ll no longer be able to access unused cap amounts from 2019–20, as the five-year window will roll forward to start from 2020–21.
So, make sure to check your 2019-2020 concessional rollover as this year is your final opportunity to maximise any carry-forward cap from the 2019–20 financial year.
-
Proposed tax on super balances over $3 million
One change still making its way through the legislative process is the proposed Division 296 tax. If passed, it would impose an additional 15% tax on earnings attributed to super balances exceeding $3 million.
This new tax would apply not only to realised earnings (like dividends or rental income) but to unrealised gains such as increases in the value of shares or property that haven’t been sold.
While this change isn’t yet law, the government has signalled strong intent to push it through. If your super balance is approaching or exceeds the $3 million threshold, keep an eye on this piece of legislation.
Our final thoughts
The upcoming superannuation changes offer a mix of opportunity and future legislative changes to consider if you are approaching retirement or have a large super balance.
Reach out to the team if you’d like us to assist in a review of your fund and tax-effective strategies to boost your super and save for retirement.
