Super Alert: Div 296 tax and super matters

Division 296 tax

The Federal Budget handed down on Tuesday did not include a mention of the contentious tax on unrealised earnings for individuals with a superannuation balance above $3,000,000.

This likely means that the tax is set to become an election issue and may be reintroduced into parliament if the Labor Party are returned to government after the up-coming election.

As such, our superannuation and private wealth teams continue to advise clients with larger superannuation balances to wait and see how and when this tax is imposed before making any decisions.

Other super matters

Changes to some superannuation rates and caps from 1 July 2025

Superannuation guarantee contributions

From 1 July 2025 the superannuation guarantee rate will increase from 11.5 per cent to 12 per cent
Individuals who make personal concessional contributions or have salary sacrifice contributions made by their employer may need to factor the increase into their arrangements.

Transfer balance cap

From 1 July 2025 the general transfer balance cap will increase from $1.9 million to $2.0 million
The transfer balance cap limits the amount of superannuation that an individual can use to start an income stream
The general transfer balance cap was introduced from 1 July 2017 at $1.6 million and is indexed in line the Consumer Price Index (CPI) in $100,000 increments.

What is not changing

Concessional contributions

The concessional contributions cap is indexed to Average Weekly Ordinary Time Earnings (AWOTE) in $2,500 increments
The concessional contributions cap will remain at $30,000 from 1 July 2025.

Non-concessional contributions

The non-concessional contributions cap is calculated as four times the concessional contributions cap
From 1 July 2025, the non-concessional contributions cap will remain at $120,000
Accordingly, the three-year bring forward limit also remains at $360,000 from 1 July 2025.

Catch-up contributions

The $500,000 threshold for accessing the five-year concessional catch-up contributions is not indexed and will remain at $500,000.

Payday Super

From 1 July 2026, it is proposed employers must pay their employees’ super on payday, whether it’s weekly, fortnightly, or monthly
For more information about Payday Super can be found in our recent article from the tax team, Payday Super regime - draft legislation released.

BDO’s approach

For clients with larger self-managed superannuation fund (SMSF) and superannuation balances, advice from our superannuation team has always been to wait and see how and when the tax would be imposed before rushing to take any action. 

If you would like to discuss the bill further, please contact your BDO adviser for more information. If you’re not yet a BDO client but would like to speak to our superannuation experts about the future of your investments, contact us today.

Disclaimer:

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