Superannuation Changes for FY2026–27

One of the more prominent changes from 1 July 2026 is the increase in the annual concessional contribution cap. The concessional contribution limit has increased from $30,000 to $32,500 per financial year. Concessional contributions include:

• Employer Superannuation Guarantee (SG) contributions
• Salary sacrifice contributions
• Personal tax-deductible super contributions

These contributions are generally taxed at 15% when they enter your super fund. For individuals with adjusted income exceeding $250,000, Division 293 tax increases the effective tax rate on concessional contributions to 30%. Even so, this is often considerably lower than many Australians’ marginal income tax rate, making superannuation one of the most tax-effective investment structures. For many professionals and business owners, maximising concessional contributions can be an effective strategy to reduce taxable income and accelerate retirement savings.

One of the most underutilised superannuation strategies remains the carry-forward of concessional contributions. If your total super balance was less than $500,000 on 30 June 2026, you may be able to access any unused concessional contribution caps from the previous five financial years.

This can allow you to make a larger tax-deductible contribution in a future year. The strategy is particularly valuable for people who:

• Receive a bonus
• Sell an investment asset
• Experience an unusually high-income year
• Have irregular self-employed income

Used correctly, it can reduce taxable income while boosting retirement savings.

Yes. The annual non-concessional contribution cap has also risen. You can now contribute up to $130,000 each financial year using after-tax money. For those eligible to use the bring-forward provisions, this means contributing up to $390,000 in a single financial year by bringing forward two additional years of future contribution caps.

Unlike concessional contributions, non-concessional contributions are made from money that has already been taxed, meaning no contributions tax is generally payable when the money enters your super fund. These larger contribution limits can be particularly valuable following an inheritance, a business sale, or another financial event.

The transfer balance cap has also increased. From 1 July 2026, eligible Australians commencing a retirement income stream for the first time can transfer up to $2.1 million into the tax-free retirement pension phase. This is a large increase from previous years and reflects the government’s ongoing indexation of the cap. Once your super moves into the retirement phase, several tax advantages become available. For eligible retirees:

• Investment earnings within the pension account are generally tax-free.
• Capital gains generated within the pension account are also generally tax-free.
• Pension payments received after age 60 are generally tax-free.

This makes the retirement phase one of the most tax-efficient investment environments available under Australian law.

For eligible Australians aged 55 and over, the downsizer contribution rules remain unchanged. If you sell a home that you have owned for at least 10 years, you may be able to contribute up to $300,000 from the sale proceeds into super. For couples, this can potentially allow $600,000 to be contributed, even if only one spouse owns the property.

One of the biggest advantages of the downsizer contribution is that it does not count towards your annual non-concessional contribution cap. In some situations, this means it can be used alongside your annual non-concessional contribution limit and bring-forward provisions, allowing a sizeable amount of capital to move into the concessionally taxed superannuation environment.

Many people focus on the tax benefits of making contributions but overlook the ongoing tax advantages of investing inside super. While your super remains in the accumulation phase, investment earnings are generally taxed at 15% and capital gains on assets held for more than 12 months are generally taxed at an effective rate of 10%. These rates are much lower than personal income tax rates, allowing more of your investment returns to remain invested and compound over time.

While each annual change to superannuation may appear modest in isolation, together they create opportunities to improve retirement outcomes. Superannuation remains one of the most powerful wealth creation vehicles, but the rules continue to evolve. Understanding how the latest changes apply to your situation can help ensure you’re making informed decisions that benefit both your current financial position and your future retirement lifestyle.

If you’re unsure whether you’re making the most of the new contribution limits, or would like to explore strategies to improve your retirement outcomes, seeking personalised financial advice can help ensure your super is working as effectively as possible.

The team at First Financial comprises financial experts who help hundreds of Australians retire well and make informed, intelligent financial decisions. We cover everything from retirement and financial advice, investment and wealth management, superannuation and SMSF, insurance, tax, aged care, legal and lending services.

Contact us for holistic, well-rounded financial management strategies.