Superannuation changes from 1 July 2025

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 confirmed superannuation changes taking effect from 1 July 2025, along with proposed legislative developments.

Increased super guarantee (SG)

Millions of working Australians will receive a welcome boost to their superannuation from 1 July, when the mandatory Superannuation Guarantee (SG) rate increases by 0.5% to 12%.

The SG is the percentage of your ordinary time earnings (in addition to wages) that your employer must contribute to your super fund.

This increase marks the final step in a series of five 0.5% SG rate rises, which began in the 2021–22 financial year when the rate increased from 9.5% to 10%.

Higher transfer balance cap

From 1 July 2025, individuals starting a pension for the first time will be entitled to a personal transfer balance cap (TBC) of $2 million, up from the current $1.9 million.

The TBC is the maximum amount that can be transferred from a superannuation accumulation account into a tax-free retirement phase pension account. Any excess must remain in the accumulation phase, where earnings are taxed at 15%.

Importantly, investment earnings within the pension account can grow the balance above the $2 million cap without penalty.

Carry-forward concessional contributions

Eligible individuals can continue to “carry forward” unused portions of their concessional contributions cap from up to five previous financial years.

This means you may be able to contribute more than the current $30,000 concessional cap, provided:

• Your total super balance was less than $500,000 on 30 June of the previous financial year, and
• You have unused concessional cap amounts available.

From 1 July 2025, the earliest financial year from which unused amounts can be carried forward will roll forward to 2020–21, meaning any unused entitlements from 2019–20 will expire on 30 June 2025.

Proposed higher taxes on $3 million-plus super balances

Among the most debated superannuation changes is the proposed Division 296 tax. If passed, this legislation would impose an additional 15% tax on earnings attributable to superannuation balances exceeding $3 million. This tax would apply to both realised and unrealised gains, meaning assets such as shares or property could be taxed, even if they haven’t been sold.

This measure is proposed to take effect from 1 July 2025 and would represent a significant shift in how high-balance superannuation accounts are taxed.

Have questions or need help navigating these upcoming superannuation changes? Our experienced financial advisers are here to support you. Whether you’re planning for retirement or simply want to ensure you’re making the most of your opportunities, we can help you develop a strategy tailored to your goals. Contact us today.

Sources

Vanguard Super Pty Ltd