Money
Putting extra money into super just got even more attractive
Some significant changes to superannuation arrangements will come into effect on 1 July. Here’s what you need to know about the new rules.
By Nigel Bowen
Australia’s superannuation system is designed to encourage low-income and middle-income Australians to save for their retirement while discouraging high-income Australians from gaming the system by parking large amounts of money in their (lightly taxed) super accounts.
During the recent federal election campaign there was a focus on the tax on super balances – or, more precisely, the earnings on balances over $3 million – being doubled from 15% to 30%, and a claim that “the government is coming after your super”.
That’s true if you’re one of the 80,000 Aussies with three million or more stashed away in your super account. But the changes, which come into effect on 1 July, would seem to benefit most Australians.
The most important changes
There’s an annual tweaking of the ‘super rules’, with the new arrangements typically taking effect on 1 July, the start of the new financial year. On top of the standard tinkering, some significant changes are being introduced in mid-2025.
Here’s what you should be aware of.
Increase in general transfer balance cap
Super contribution caps are holding steady for the 2025/26 financial year:
- $30,000 for concessional (before-tax) contributions
- $120,000 for non-concessional (after-tax) contributions
But here’s where things shift slightly.
From 1 July 2025, the general transfer balance cap (TBC) – that’s the lifetime limit on how much super you can move into a tax-free retirement account – will increase from $1.9 million to $2 million.
And because your ability to make non-concessional contributions (NCCs) depends on your total super balance (TSB) and the TBC, this means some thresholds are also changing.
Here’s a quick look:
If your super balance is nudging the current $1.9 million cap but likely to fall below $2 million on 30 June 2025, this change might open up new contribution opportunities next financial year.
You might be able to:
- Make up to $120,000 in after-tax contributions
- Trigger the bring-forward rule, allowing you to put up to $240,000 or $360,000 into your super in one go (depending on your balance)
- Complete a bring-forward that started in 2023/24
- Use a recontribution strategy or spouse contribution
- Qualify for a government co-contribution or spouse tax offset, if eligible.
If you’re planning to add more to your super in the next year or 2 – or want to maximise your tax-free income in retirement – it’s worth speaking to a financial adviser. Putting any extra you can afford in now could mean big benefits later.
Your super is about to get a boost
The Super Guarantee – the proportion of your income your employer directs into your super account – has been steadily rising since it was introduced at a rate of 3% in 1992. In the new financial year, it will increase from 11.5% to 12%. There are currently no plans to increase it beyond this rate.
Adjustment to government co-contribution thresholds
From 1 July, the income thresholds for government co-contributions will increase slightly.
- The lower income threshold will rise to $47,488
- The higher income threshold will rise to $62,488
This could impact your eligibility for government top-ups to your super, so it’s worth checking where you sit.
Tax on super balances over $3 million
Yes, it’s happening. From 1 July, if your super balance is over $3 million, earnings on the portion above that amount will be taxed at 30%, up from the usual 15%.
This includes unrealised capital gains, which has drawn a fair amount of criticism. But at this stage it’s expected to affect only a small group, around 80,000 Australians. It’s budgeted to raise $2.3bn in 2027-28, and $40bn over a decade.
This ABC News video is helpful to understand exactly what’s happening and the suggested implications.
Contribution splitting implications
While the rules around super contribution splitting aren’t changing in the 2025 financial year there have been a few changes that may impact your decision to split.
If you’re thinking about sharing part of your super with your partner to balance things out, the current setup still applies: you can split up to 85% of your concessional (before-tax) contributions from the previous financial year into their super account. It’s a useful strategy for couples looking to even out retirement savings or possibly reduce tax. You can read more at the ATO’s guide to contribution splitting here.
What has changed (as of April 2025) is how super is valued and split during a separation or divorce – something that only applies to family law proceedings, not everyday retirement planning. If you’re curious about those updates, you can find the details on the Attorney-General’s Department website.
If you’re not sure whether splitting makes sense for you and your partner, it’s a good idea to check in with a financial adviser. A small shift now could lead to a better outcome down the track.
Your employer needs to pay your super when they pay you
Not one for this year, but worth noting for next. Starting from 1 July 2026, employers will need to pay super at the same time they pay wages instead of quarterly. This change, known as “payday super”, means super will be paid more often, helping balances grow faster thanks to more frequent compounding.
Changes pre-retirees should pay special attention to
Rest assured, if you’re under 55, nothing in the current raft of changes is likely to noticeably impact your current lifestyle or future financial plans. However, there are a couple of changes that are significant for those planning on retiring, or semi-retiring, in the coming years.
The preservation age is now 60, no exceptions
You’re probably aware that you can’t get your hands on your super money until you reach a certain age. But you’re probably not quite sure what that age is. This is to be expected given there have previously been different preservation ages depending on what year you were born. In a rare victory for super simplification, the preservation age for everyone is now 60.
This tweak isn’t likely to be life-changing if you’re planning on working full-time until 67 or beyond. But if you want to cut back your work hours after hitting 60, you may want to cover the drop in your salary by starting to withdraw money from your super account. This is called a ‘Transition to Retirement’ (TTR) strategy.
Setting the preservation age at 60 for everyone also simplified the tax arrangements around TTR. To summarise, from now on you can’t access your super money, barring exceptional circumstances, until you are 60, but all ‘TTR withdrawals’ are tax-free after this. (But please be aware that the returns you’re earning on your super balance remain taxable until you fully retire or turn 65.)
A no-brainer investment
Super is lightly taxed and has thus far provided solid long-term returns. (These vary, but they’ve been in the 5%-9% range over the longer term.) This is why even the well-heeled and well-connected, with access to many other attractive investment opportunities, often throw any ‘spare money’ they have at their super.
If you’re within sight of preservation age, or over it but still earning an income, you may like to consider embracing a similar strategy.
Feature image: iStock/milorad kravic
More ways to manage your super: