As we approach the end of the 2025/26 financial year, we would like to remind you of key superannuation contribution rules and planning opportunities, to help maximise your retirement savings, while avoiding unnecessary tax.
Concessional Contributions (Pre-tax)
- The concessional contributions cap is $30,000 per annum.
- These include employer contributions (SG), salary sacrifice, and personal deductible contributions.
- Contributions are generally taxed at 15% within super.
- To be counted for the 2025/26 financial year, contributions must be received in the fund’s bank account by 30 June 2026.
- For personal deductible contributions, you must lodge a Notice of Intent to Claim a Deduction with your fund, and receive an acknowledgement, before claiming the deduction in your tax return.
Carry-Forward Concessional Contributions (Pre-tax)
- If your total super balance is below $500,000, you may utilise unused concessional cap amounts from the previous five financial years.
- This strategy can be particularly useful for individuals with irregular income or those looking to make larger deductible contributions.
- These contributions count towards a Division 293 tax liability
Non-Concessional Contributions (After-tax)
- The annual cap is $120,000.
- Individuals under age 75 may be eligible to use the bring-forward rule, allowing up to $360,000 over three years, subject to total super balance thresholds.
- Contributions count towards a cap in the year your super fund receives them.
Transfer Balance Cap
The transfer balance cap applies from 1 July 2017. It is a limit on the total amount of superannuation that can be transferred into the retirement phase.
If your total super balance is equal to or more than the general transfer balance cap ($1.7 million from 2021–22, $1.9 million from 2023–24, $2 million from 2025–26) at the end of the previous financial year, your non-concessional contributions cap is nil ($0) for the current financial year.
Division 293 Tax
- If your threshold income exceeds $250,000, an additional 15% tax may apply to some, or all, of your concessional contributions, increasing the effective tax rate to 30%.
- For the threshold calculation, “income” includes taxable income, reportable fringe benefits, net investment losses, and concessional super contributions.
Excess Concessional Contributions tax
Excess contributions arise where the amount contributed exceeds the concessional cap of $30000
- Excess concessional contributions are included in your personal taxable income and taxed at your marginal rate (with a 15% tax offset).
- Excess contributions count towards your non-concessional cap.
- If your non-concessional contributions cap has been exhausted, this may result in significant penalty tax unless withdrawn promptly.
- Careful monitoring is essential, particularly where multiple employers or contribution strategies are involved.
- An excess can arise as a result of a timing difference ie when contributions for a financial year, and due by 30 June of that year, are paid over to the fund, say, a month after the year end.
Downsizer Contributions
- A downsizer contribution allows individuals aged 55 or older to contribute up to $30,0000 ($60,0000 per couple) from the sale of their main residence into superannuation.
- The amount is exempt from standard contribution caps.
- It requires the home to be in Australia, owned for 10+ years, and the contribution made within 90 days of settlement.
Superannuation co-contribution
- The government super co-contribution is a scheme for low-to-middle-income earners, offering up to $500 in tax-free money for making personal after-tax contributions.
- If you earn under $47,488 in 2025-26 and contribute $1,000 you receive the maximum $500 boost, with the payment reducing for incomes up to $62,488.
Recontribution strategy
A super recontribution strategy involves withdrawing a taxable lump sum from super (usually after age 60) and recontributing it as a non-concessional (after-tax) contribution.
This reduces the taxable component and increases the tax-free component, aiming to reduce or eliminate the 17% tax applied to death benefits paid to non-dependent beneficiaries such as adult children.
- Eligibility: Must be under age 75 to make non-concessional contributions. Those 67 or older must meet the work test or exemption.
- Contribution Caps: You must be mindful of the $360,000 three-year bring-forward rule for non-concessional contributions.
- Total Super Balance (TSB): High balances may restrict the ability to make non-concessional contributions.
Aged under 75 years
- If you’re under 75 years of age your fund can accept all types of contributions.
- Downsizer contributions can only be made if you are aged 55 years or older from 1 January 2023, or if you were aged 60 years or older from 1 July 2022 to 31 December 2022.
- If you’re 67 to 74 years old, you will be required to meet the work test or work test exemption in order to claim a deduction for a personal superannuation contribution.
Aged 75 years or older
If you’re 75 years or older, your fund can always accept compulsory employer contributions and downsizer contributions.
In the 28 days after the end of the month in which you turn 75 years old, your fund can accept the following types of voluntary contributions:
- voluntary employer contributions, such as salary sacrifice contributions
- other amounts paid by your employer to your super fund, such as administration fees and insurance premiums
- other voluntary contributions such as
- personal contributions
- spouse contributions.
Key Planning Considerations
- Ensure contributions are received by your fund before 30 June 2026, to qualify as a deduction in that year.
- Lodge and confirm acknowledgement of any Notice of Intent for personal deductible contributions.
- Review your contribution levels before 30 June.
- Consider utilising carry-forward caps where appropriate.
- Be mindful of total super balance thresholds impacting contribution eligibility.
- Seek advice to avoid breaching caps and triggering additional tax.
SUPER CONTRIBUTION CAPS ARE INCREASING FROM 1 JULY 2026 AND
THE REAL COST IS DOING NOTHING
From 1 July 2026, changes to Australia’s superannuation contribution caps will give individuals more flexibility to build their retirement savings.
- Higher concessional and non-concessional caps create new opportunities to grow your super through compounding.
- Even modest increases, applied consistently, can materially improve long-term retirement outcomes.
- Making the most of these changes requires timely action – particularly around salary sacrifice and bring-forward rules.
Contribution limits increase from 1 July 2026
Concessional (before-tax) contributions
- Current cap: $30,000
- From 1 July 2026: $32,500
Non-concessional (after-tax) contributions
- Current cap: $120,000
- From 1 July 2026: $130,000
Individually, these increases may seem incremental. Over time, however, they can meaningfully shift retirement outcomes.
The concessional contribution opportunity
An additional $2,500 per year contributed to super on a concessional basis, invested at a long-term return of around 7% p.a., could grow to approximately $37,000 over 10 years.
This is before considering the potential tax benefit of contributing at the superannuation tax rate of 15%, rather than personal marginal tax rates.
The non-concessional contribution opportunity
Failing to utilise the additional $10,000 per year non-concessional cap could mean forgoing around $148,000 in additional super over 10 years, assuming a 7% p.a. return.
While these contributions don’t provide an upfront tax deduction, the value comes from long-term compounding in a concessionally taxed, and potentially tax-free, environment.
The bring-forward rule: why timing matters
With the increase in the non-concessional cap, eligible individuals under age 75 may be able to bring forward up to three years of contributions – up to $390,000 from 1 July 2026.
Consider the impact of timing:
- Investing $390,000 upfront for 10 years at ~7% p.a. could grow to ~$767,000
- Spreading the same amount over three years results in ~$718,000
- Difference: ~$49,000, driven purely by earlier compounding
There is no change in risk or return assumptions, it is just better timing.
If you trigger the bring-forward rule in the current 2025-2026 financial year, you are locked into the lower cap structure for the entire three-year period. This means your maximum available NCC would be based on the lower pre-indexation cap, restricting the total amount you can add to super.
To fully benefit from the new $390,000 three-year limit, you could consider delaying making the contribution until 1 July 2026 or later, provided you meet the TSB eligibility and contribution requirements. This strategy ensures you access the maximum possible amount for moving after-tax wealth into super, which is often a key consideration after a significant sale or asset realisation.
Where you are looking to put an even higher amount into super, another scenario to think about is whether you contribute up to the NCC limit of $120,000 in the current financial year, before making a $390,000 contribution under the bring-forward rule from 1 July 2026.
The combined opportunity cost
When higher concessional limits, non-concessional capacity and bring-forward opportunities are overlooked, the opportunity cost compounds quietly. Even relatively small under-contributions can translate into well over $200,000 less in super over a decade, depending on eligibility and timing.
This is the power of compounding in practice by keeping strategies aligned with evolving rules.
