TL;DR
- The SG rate has increased from 11.5% to 12%, boosting employer contributions.
- The transfer balance cap has risen to $2 million, affecting retirement phase options and contribution eligibility.
- The proposed Division 296 tax will double the tax rate on earnings above $3 million in super.
- Review your payslip and consider seeking advice to maximise the benefits of these updates.
What is Changing for Superannuation in 2025?
Several significant superannuation changes take effect from 1 July 2025, affecting how much you and your employer can contribute and how your retirement savings are taxed.
These updates are designed to help Australians grow their super balances and adjust for inflation and rising retirement needs. Staying informed and reviewing your strategy can help you benefit from the new rules.
Employers must now pay a higher Super Guarantee (SG) rate, the transfer balance cap has increased, and a new tax is proposed for large balances. Understanding how these changes work can help you plan for a better retirement outcome.
How Does the SG Rate Increase to 12% Affect You?
From 1 July 2025, the SG rate rises from 11.5% to 12%, increasing the compulsory super contributions employers make on your behalf.
This means more of your salary is paid into your super fund, potentially resulting in a higher balance at retirement.
Every Australian employer must now contribute 12% of their ordinary time earnings to their chosen super fund. Check your first payslip for the new financial year to ensure the increase is being applied correctly. If you use salary sacrifice, remember the SG is calculated on your total salary before deductions.
You can estimate the effect of this change on your retirement using the MoneySmart superannuation calculator.
Summary:
The SG rate rise helps most working Australians grow their retirement savings faster.
What is the New Transfer Balance Cap and Who Benefits?
The general transfer balance cap (TBC) rises to $2 million, allowing more to be moved into tax-free retirement phase pensions.
This change may increase eligibility for after-tax contributions and support higher retirement incomes for many Australians.
The TBC is the limit on how much super can be moved into the retirement phase, where investment earnings are tax-free. From 1 July 2025, this cap rises from $1.9 million to $2 million. If you exceed the cap, you must transfer the excess to your accumulation account or withdraw it as a lump sum, and extra tax may apply.
If you have already started a retirement income stream, your personal TBC is based on the cap at the time your pension started. Check your personal TBC through ATO online services.
Eligibility for after-tax contributions:
This higher cap means more people qualify to use the bring-forward rule for non-concessional (after-tax) contributions. If your total super balance is under $2 million, you may now be able to contribute up to $360,000 over three years using this rule.
Special rules apply for defined benefit income streams.
Summary:
The increased TBC allows larger balances in the retirement phase and more flexibility with contributions.
Are There Changes to Contribution Caps and the Bring-Forward Rule?
While the annual contribution caps remain unchanged, more people may be eligible for the bring-forward rule due to the higher transfer balance cap.
This can help boost your super with after-tax contributions, subject to specific eligibility requirements.
Contribution caps:
- The concessional (before-tax) contributions cap remains at $30,000 per year.
- The non-concessional (after-tax) contributions cap is still $120,000 per year.
If your total super balance is less than the new $2 million cap, you may now use the bring-forward rule, contributing up to $360,000 in one year (using three years’ worth of non-concessional contributions at once). The caps have not increased, but eligibility has expanded.
Unused concessional cap amounts from previous years can also be carried forward for up to five years, potentially increasing the amount you can contribute in a single year.
Tax on contributions:
The tax paid depends on whether contributions are before or after tax if you exceed your caps, or if you are a high-income earner. You can find more on this at the ATO’s contributions page.
Summary:
Contribution caps remain unchanged, but eligibility for the bring-forward rule has broadened.
How Will the Proposed $3 Million Super Tax Work?
A new tax, known as Division 296, is expected to apply to earnings on super balances above $3 million from 1 July 2025.
This measure is not yet law but is expected to pass, doubling the tax on earnings for very large super accounts.
What is Division 296?
Balances exceeding $3 million will have their investment earnings taxed at a rate of 30% (instead of the standard 15%). If your balance falls below $3 million in later years, any losses can be carried forward to offset future tax liabilities.
This tax is designed to affect only a small proportion of superannuation members with very high balances. If you could be affected, it’s essential to review your situation and seek specialist advice.
Summary:
The Division 296 tax increases the rate on super earnings above $3 million to 30%.
What Should You Do Next to Maximise Your Retirement Savings?
Staying proactive and informed is the best way to capitalise on these changes and safeguard your retirement savings.
Check your payslip to confirm the SG rate increase, review your super balance and transfer balance cap, and consider contribution strategies that suit your goals.
With the new rules in place, planning ahead is essential. Furthermore, If you are unsure how these changes affect you, seek advice from a qualified adviser to ensure your superannuation works as hard as possible for your future.
Summary:
Review your super and seek professional advice to make the most of the new rules. Contact us today.
Frequently Asked Questions
What is the SG rate from July 2025?
The Super Guarantee rate rises to 12% from 1 July 2025. Employers must contribute a percentage of your ordinary time earnings into your super fund, helping your retirement balance grow more quickly.
What is the transfer balance cap for 2025–26?
The general transfer balance cap is $2 million from 1 July 2025. This is the maximum you can move into the retirement phase, where earnings are tax-free. Exceeding this cap may result in additional tax or require you to withdraw the excess amount.
Can I make more after-tax contributions now?
Yes. If your total superannuation balance is below $2 million, you can use the bring-forward rule to make up to $360,000 in after-tax contributions over three years.
Will the new $3 million super tax affect everyone?
No. The proposed Division 296 tax applies only to earnings on super balances exceeding $3 million and is expected to affect a small number of high-balance members.
Have contribution caps changed for 2025?
No. The annual concessional cap remains $30,000, and the non-concessional cap remains $120,000. However, eligibility for the bring-forward rule has expanded, but the caps themselves are unchanged.
Where can I check my personal transfer balance cap?
You can check your personal transfer balance cap using ATO online services. This record is updated with every debit and credit to your retirement phase accounts.
What should I do to make the most of these changes?
Check your payslip for the new SG rate, review your super balance, consider using the bring-forward rule, and speak with a qualified adviser for tailored strategies.
