As we approach the new financial year, it’s important you are aware of the upcoming changes in superannuation. These adjustments may impact your retirement planning strategy.
- Superannuation Guarantee (SG) Increase
- The SG rate will rise from 11.5% to 12% on 1 July 2025. This has been a slow and steady increase since July 2013 when the rate was 9%. There are no current plans to increase the rate above 12%.
- Employers should know what they’re doing but it’s worth checking to see they contribute 12% of your ordinary time earnings into super.
- Superannuation on Paid Parental Leave
- Super contributions will be made on government-funded paid parental leave.
- This will improve retirement outcomes for parents taking time off work.
- Transfer Balance Cap (TBC) Indexation (the lifetime limit of the amount of super that can be transferred into retirement phase income streams)
- The general TBC will increase from $1.9 million to $2 million.
- Individuals who haven’t started a retirement income stream by 1 July 2025 will benefit from the full $2 million cap.
- Those who have commenced a pension and have not used the full amount of their personal TBC at the time, will get a proportional increase in their personal TBC.
- While the concessional and non-concessional contribution limits remain unchanged from 1 July, the change in the general TBC impacts the ability to make non-concessional contributions for those with high super balances as per the table.
|
Super balance at 30 June 2025 |
Non-concessional bring forward availability |
|
Less than $1.76m |
3 years ($360,000) |
|
$1.76m to < $1.88m |
2 years ($240,000) |
|
$1.88m to <$2m |
1 year $120,000 No bring forward available |
|
$2m and above |
$0 |
Why does TBC indexation matter?
- If you’re eligible to commence a retirement income stream now, it may be worthwhile delaying this until 1 July 2025.
- If you have the ability to make non-concessional contribution this financial year, those with high balances need to consider how this might impact the ability to do further contributions next financial year.
What’s changes are likely to come?
Now that the election is over and Labor has been re-elected, there’s every reason to believe the additional tax for those with $3m+ super balances (Division 296 tax) will be legislated. A 30% tax rate will apply to earnings on the portion of superannuation balances exceeding $3 million, up from the current 15%.
The recent Federal budget included the additional tax expected to be collected in their forecasts. The policy has come under criticism given tax could be paid on unrealised capital gains which is contrary to our taxation system.
It’s expected to impact around 80,000 individuals with large balances.
Final word – tread cautiously
The super rules are complex and individual circumstances vary. It’s easy to make simple mistakes. We recommend you seek personal advice. Please reach out if we can help.
Phone: 03 8610 6396
Email: info@keepwp.com.au
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.
