Following the recent release of inflation (CPI) and wage growth (AWOTE), we have a clear picture of the changes coming to superannuation thresholds from 1 July 2026.
This won’t affect everyone, however these changes are a positive for those looking to build their retirement savings, as indexation has triggered the first increase in contribution limits in two years. Below is a summary of the key changes and how they might impact your wealth strategy.
- Increased Contribution Caps
The annual limits on how much you can add to your super are set to rise, allowing for more tax-effective saving.
Concessional Contributions (Pre-tax): The cap will increase from $30,000 to $32,500. This includes employer Super Guarantee (SG), salary sacrifice, and personal deductible contributions.
Non-Concessional Contributions (After-tax): Because this cap is set at four times the concessional limit, it will rise from $120,000 to $130,000.
- The $2.1 Million Transfer Balance Cap
The general Transfer Balance Cap (TBC) which limits the total amount you can move into a tax-free retirement pension will increase from $2 million to $2.1 million.
New Pensions: If you start your first retirement pension on or after 1 July 2026, you will have access to the full $2.1 million limit.
Existing Pensions: For those already in the retirement phase, you may be entitled to a proportional increase in your personal cap based on the highest unused portion of your previous limit. This calculation is complex and warrants a review.
- Enhanced “Bring-Forward” Opportunities
The increase in the TBC also flows through to the Total Super Balance (TSB) thresholds, which determine your eligibility to “bring forward” up to three years of non-concessional contributions.
|
TSB at 30 June 2026 |
Bring-Forward Period |
Maximum Contribution |
|
Less than $1.84m |
3 years |
$390,000 |
|
$1.84m to < $1.97m |
2 years |
$260,000 |
|
$1.97m to < $2.1m |
No bring-forward |
$130,000 |
|
$2.1m or more |
Nil |
$0 |
- “Payday Super” and Compliance
From 1 July 2026, a major shift in how super is paid will begin. Employers will be required to pay Super Guarantee contributions at the same time they pay salary and wages, rather than quarterly. This “Payday Super” initiative is designed to ensure employees benefit from earlier compounding of their retirement savings and to reduce the risk of unpaid super.
- For Higher Balances: Division 296 Tax
It is important to keep in mind the proposed “Division 296” tax, is scheduled to apply from 1 July 2026. This introduces an additional 15% tax on earnings attributable to the portion of a Total Super Balance above $3 million.
While the first asset assessment won’t occur until 30 June 2027, the 2026-27 financial year is the critical period for reviewing whether your current super structure remains the most tax-efficient option.
- Government co-contributions:
If you’re earning less than $49,293 annually (with phase-out up to $64,293), and you make personal after-tax contributions to super without claiming a tax deduction, the government could match up to $500. A nice little extra for building your nest egg especially if you’re an employee or self-employed with at least 10% of income from work.
- Maximum Super Guarantee Base:
If you’re a high earner making over $250,000 a year, the good news is the threshold for your employer’s mandatory super contributions jumps to $270,830 from 1 July 2026. This means you’ll automatically receive 12% super guarantee on more of your income, potentially adding thousands to your nest egg without lifting a finger.
Why does this matter?
Indexation creates a “window of opportunity” to move more capital into the concessionally taxed superannuation environment. However, many of these changes particularly the bring-forward rules and proportional TBC increases require careful timing to avoid accidental tax penalties.
Additionally, the 2025-26 financial year is the final opportunity to use any “catch-up” concessional contributions that accrued in the 2020-21 year before they expire on 30 June 2026.
What can you do?
If you are approaching retirement or are managing a high super balance, now is an ideal time to review your contribution or pension commencement strategy. You should have an eye for where your TSB might be at 30 June 2026. In some cases, deferring non‑concessional contributions may be beneficial to maximise bring‑forward provisions next financial year. In other situations, maximising contributions earlier may be more appropriate.
Be careful
These rules are complex and individual circumstances vary. We recommend you seek personal advice. Please reach out to us at Keep Wealth Partners if we can review how this plays out for you.
Brendan Fahy is a Director at Keep Wealth Partners Pty Ltd (AFSL 494858)
This information is of a general nature only and may not be relevant to your particular circumstances. The circumstances of each investor are different, and you should seek advice from a financial planner who can consider if the strategies and products are right for you.
