FY27 brings changes to Superannuation

From 1 July 2026, Australia’s superannuation system will undergo a series of legislated changes, driven by indexation and the introduction of a new tax measure for large balances. These changes affect contribution limits, retirement‑phase pension caps, and the taxation of superannuation earnings for high‑balance members.
 

Indexation of contribution caps

From 1 July 2026, both concessional and non‑concessional contribution caps will increase following the release of wage growth data, triggering automatic indexation under the superannuation rules.

Key changes include:

• Concessional Contribution Cap

  The concessional contribution cap will rise from $30,000 to $32,500 per financial year. This cap applies to employer contributions, salary sacrifice amounts, and personal deductible contributions.
   

• Non-Concessional Contribution Cap

  The non‑concessional contribution cap will increase from $120,000 to $130,000 per year, reflecting its link to the concessional cap.
   

• Total Super Balance Threshold

  The upper Total Super Balance threshold relevant to non‑concessional contribution eligibility will increase from $2.0 million to $2.1 million.
   

Increase to the transfer balance cap

The general transfer balance cap, which limits the amount that can be transferred into tax‑free retirement‑phase pensions, will increase from $2.0 million to $2.1 million on 1 July 2026.

Individuals commencing a retirement‑phase income stream for the first time on or after this date will have a personal transfer balance cap of $2.1 million. For those who commenced pensions prior to 1 July 2026, any increase in their personal cap will be proportionate, based on the extent to which they have previously used their cap.

The Australian Taxation Office will calculate and display each individual’s personal transfer balance cap using information reported by superannuation funds.
 

Division 296: new tax on large super balances

How Division 296 works

Division 296 represents a significant structural change to the taxation of superannuation earnings for individuals with very large superannuation balances.

The legislation has passed both houses of Parliament and will be applied from 1 July 2026.

Under Division 296, an additional personal tax applies to superannuation earnings attributable to the portion of an individual’s Total Super Balance that exceeds $3 million.

Key features of the new tax includes:

• The tax is assessed to the individual, rather than to the superannuation fund.
• It applies across all superannuation interests, including SMSFs, retail funds and industry funds.
• An additional 15% tax applies to earnings attributable to balances above $3 million, with a higher tier applying to balances above $10 million.
• For the first year of operation (2026–27), Total Super Balance is measured at 30 June 2027. In later years, the greater of the start‑ or end‑of‑year balance will be used.
   

Speak to a Financial Advisor about your superannuation strategy If you would like to discuss how these changes affect your strategy or if you believe our specialised superannuation team can help you, don't hesitate to get in touch with us.

 

This information is general in nature and is provided by Partners Wealth Group.  It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any decisions based on this information.