Insights

Corinne Kirk  ·  Aug 08, 2025  ·  Accounting and Taxation

The start of each financial year brings a set of legislated adjustments to superannuation rates and thresholds. For 2025–26, the most significant change is the increase in the superannuation guarantee rate to 12 per cent — the final step in the schedule of increases that has been in train for several years. The contributions caps and transfer balance cap have also moved. What follows is a precise account of what has changed, what has not, and what the changes require in practice.

Superannuation guarantee rate: 11.5% to 12%

From 1 July 2025, the superannuation guarantee rate increased from 11.5 per cent to 12 per cent of ordinary time earnings. This is the legislated endpoint — no further increases are scheduled.

The practical implications for employers are specific. Payroll systems must be calculating contributions at 12 per cent on salary and wages paid on or after 1 July 2025. Employment agreements where total remuneration is expressed as inclusive of superannuation require review: where the contract is structured on a total remuneration basis, the increased SG rate will reduce take-home pay unless the employer elects to absorb the difference or the contract is renegotiated. Neither outcome is automatic — it depends on the contract terms.

The consequences of paying SG late or at an incorrect rate remain significant: loss of the tax deduction for the contribution, the superannuation guarantee charge, interest, and administration charges. Employers who are uncertain about their payroll configuration should confirm it before the issue becomes a compliance matter.

Non-concessional contributions: updated total superannuation balance thresholds

The annual concessional contributions cap remains at $30,000 for 2025–26. The standard non-concessional contributions cap remains at $120,000.

What has changed is the upper total superannuation balance threshold at which non-concessional contributions become unavailable. The general transfer balance cap has increased to $2,000,000, and the TSB limits for non-concessional contributions have adjusted accordingly. For the 2025–26 financial year, the position is as follows:

• TSB below $1.76 million: full three-year bring-forward available, cap of $360,000
• TSB between $1.76 million and $1.88 million: two-year bring-forward available, cap of $240,000
• TSB between $1.88 million and $2.00 million: standard annual cap of $120,000, no bring-forward
• TSB at or above $2.00 million: no non-concessional contributions permitted

These figures are based on the member's TSB as at 30 June 2025. Members approaching or within these ranges should confirm their position before making contributions.

Personal deductible contributions

A superannuation fund member may claim a tax deduction for personal after-tax contributions made to their fund, subject to a set of conditions that must all be satisfied. The member must be under 67, or between 67 and 74 and satisfying a work test or work test exemption. A valid notice of intent to claim a deduction — using the approved form NAT 71121 — must be lodged with the fund and acknowledged by the fund before the deduction can be claimed.

The notice of intent must be lodged by the earlier of the date the member lodges their income tax return for the relevant year, or 30 June of the following financial year. Critically, a notice lodged after the member has rolled over their entire interest to another fund, withdrawn their entire balance, or commenced a pension using any part of the contribution will not be valid. The deduction is lost in those circumstances, and it cannot be recovered.

Updated thresholds for 2025–26

The key threshold movements for the year are as follows:

• General transfer balance cap: $2,000,000 (up from $1,900,000)
• Defined benefit income cap: $125,000 (up from $118,750)
• CGT lifetime cap: $1,865,000 (up from $1,780,000)
• Untaxed plan cap: $1,865,000 (up from $1,780,000)
• SG maximum contributions base (per quarter): $62,500 (down from $65,070)
• PCG 2016/5 safe harbour rate for related party LRBAs: 8.95% (down from 9.35%)

The following remain unchanged: concessional contributions cap ($30,000), standard non-concessional contributions cap ($120,000), maximum three-year bring-forward cap ($360,000), and the Division 293 income threshold ($250,000).

If you have questions about how these changes apply to your superannuation position or your payroll obligations, we welcome the conversation.

Corinne Kirk
Partner, Accountant

1300 102 542 | 0405 106 401
corinne@egu.au

This is general advice. It does not take account of your objectives, financial situation, or needs, and is not a substitute for advice that does. Before acting on anything in it, consider whether it suits your circumstances, and consider the relevant Product Disclosure Statement.

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