By Colin Lewis, Head of Strategic Advice, Fitzpatricks Advice Partners
July 2025

With the new financial year underway, now’s an ideal time to get your super sorted for 2025-26 as good financial planning is a year-round process, not a 30 June flurry.

So, what are the opportunities with super this year?

Pre-tax contributions

The concessional contributions cap remains at $30,000.

Unused cap amounts since the 2020-21 financial year may be used, provided your total super balance was less than $500,000 at 30 June 2025. Any unused cap amount from 2019-20 is now lost.

Regardless of your super balance, you and/or your employer may contribute up to your cap but don’t stress if you exceed it as there’s no penalty – any excess is taxed as normal income as if it hadn’t gone into super in the first place.

After 33 years, compulsory employer Superannuation Guarantee (SG) contributions have finally hit the top rate of 12 per cent. The 0.5 per cent increase in SG rate means the maximum amount of voluntary concessional contributions wage earners can make has reduced.

If you wish to top-up your super, you can make a personal deductible contribution and/or arrange to make salary sacrifice contributions via your employer.

With a deductible contribution, you must provide your fund with a notice of intent to claim a tax deduction and have it acknowledged – normally done around tax time, but if you’re planning on starting a pension, rolling over or withdrawing the contribution, it must be done first; don’t wait.

If you’re aged 67 to 74 wanting to make a deductible contribution, you must meet the work test – 40 hours of gainful employment in 30 days. If you won’t meet this test but met it in 2024-25 and had a total super balance below $300,000 at 30 June 2025, then you may contribute under the ‘work test exemption’, provided you haven’t used this exemption before.

Salary sacrifice allows you to set-and-forget for the year as contributions are automatically made on a regular basis. Making regular deposits into an investment at regular intervals is a powerful way to invest – known as ‘dollar cost averaging’. It builds exposure to growth assets in a disciplined way, reduces the risk of investing during volatile times and avoids the pitfalls of trying to time entry into markets.

But making a personal contribution is more flexible if you’re unsure of your capacity to contribute with cost-of-living pressures and timing of expenses.
You also have control and certainty over the amount and timing of your contribution and dealing with the contributions cap at year end – you’re not reliant on someone else and have peace of mind knowing your money gets to your fund.

Employers can take time between deducting money from wages and contributing. Unfortunately for some, the money never gets there. It also avoids a nightmare should your employer go into administration/receivership, as money deducted from salary but not contributed may take years to recover.

In calculating voluntary concessional contributions include your employer’s SG contributions or notional taxed contributions for a defined benefit fund, and your fund’s administration expenses and insurance premiums if paid by your employer, as all count towards the cap.

You can now split up to 85 per cent of your concessional contributions made in 2024-25 to your spouse’s super – to maximise the amount you can both get into the tax-free retirement phase, or to move benefits to an older spouse for earlier access to tax-free benefits, or from a spouse at or over Age Pension age (age 67) to a younger spouse to shelter from Centrelink means testing.

If you made a ‘double contribution’ in June to maximise your tax deduction in 2024-25, don’t forget to allocate the second contribution by July 28.

And if you’re using super to save for your first home, a contribution of up to $15,000 will help you get to the maximum releasable amount of $50,000 sooner under the First Home Super Saver Scheme.

Post-tax contributions

The non-concessional contributions cap – four times the concessional cap – remains at $120,000.

The work test doesn’t apply to non-concessional contributions, but you cannot contribute if your total super balance was $2 million or more at 30 June 2025.

If your total super balance was less than $1.76 million at 30 June 2025, and under age 75 on 1 July and not already in a ‘bring-forward period’, you may contribute up to $360,000; if it was between $1.76 and $1.88 million then it’s $240,000.

To receive a $500 government co-contribution this year for a contribution of $1,000, your income must be less than $47,488 with at least 10 per cent of it coming from employment or business – and you must be under 71.

The co-contribution progressively reduces where you earn between $47,488 and $62,488.

You may be eligible to make a ‘downsizer contribution’ of up to $300,000 if you sell a home you’ve lived in that you or your spouse owned for at least 10 years and are aged 55 or more – boosting your super even if you’re otherwise ineligible to contribute due to age or your total super balance.

If you’re an eligible small business owner selling your business or an active business asset, don’t overlook the opportunity to make a CGT cap contribution of up to $1.865 million.

Age matters when it comes to voluntary pre- and post-tax contributions (except downsizer contributions) – they must be received no later than 28 days after the end of the month you turn 75.

Starting a super pension

If you commence a pension (other than a transition to retirement pension) for the first time, the limit on how much you can transfer into it – your transfer balance cap (TBC) – has increased to $2 million.

But if you already have a pension, your personal TBC will be less. You can obtain this from ATO Online via myGov.

To withdraw, or not to withdraw, that is the question

For 80,000 people, the biggest change to superannuation this year is the impending introduction of the tax on ‘earnings’ on balances greater than $3 million – Division 296 tax.

If this tax becomes law in its current format, then the starting point for calculating ‘earnings’ for the year is now set – total super balance at 30 June 2025.

If you’re impacted and eligible to withdraw your super, i.e. you’ve met a ‘condition of release’, you’ll have a decision to make before 30 June 2026, should you wish to avoid Division 296 tax – do you reduce your super to below $3 million?

As unpalatable as the way in which this new tax is calculated, the superannuation system will still be the best place for many people to hold retirement savings.

Now is the time to start planning to get ahead of the game.