Key SMSF Updates for the 2025 Financial Year
The 2025 financial year introduced key updates in the self-managed superannuation fund (SMSF) sector, affecting contribution caps, taxation, benefit payments, and regulatory compliance.
The 2025 FY updates form part of broader SMSF compliance updates and ongoing SMSF legislation changes that trustees and financial professionals must stay informed about to manage funds effectively and remain compliant with changing regulations.
1. Contribution Caps Overview
Concessional Contributions (CC) Cap
- From 1 July 2024:
- Cap increased to $30,000 per annum for eligible individuals.
- Includes salary-sacrificed amounts.
- Unused contributions from up to five previous years can be carried forward if the Total Super Balance (TSB) is under $500,000 as of 30 June of the previous financial year.
- Superannuation Guarantee Rate: Increased to 11.5%.
Non-Concessional Contributions (NCC) Cap
- From 1 July 2024:
- Cap increased to $120,000 per annum.
- Bring-Forward Rule: Allows individuals under 75 to contribute up to $360,000 over three years if their TSB is below $1.68 million.
- Contributions are phased out once TSB reaches $1.9 million.
2. Contribution Eligibility Changes
- Work Test: Members aged 67 to 74 only need to meet the work test if claiming a tax deduction for personal super contributions.
- Downsizer Contributions: From 1 January 2023, individuals aged 55+ can contribute up to $300,000 (each spouse) from the sale of their home.
3. Transfer Balance Cap (TBC) Updates
- TBC for 2025FY: $1.9 million.
- Personal TBC: Based on the highest balance in a member’s Transfer Balance Account (TBA) when starting a retirement-phase income stream.
- Reporting: From 1 July 2023, SMSF trustees must report TBC events (such as retirement-phase income stream commencements or withdrawals) within 28 days of the quarter’s end.
4. Taxation on Superannuation Payments
Lump Sum Payments:
- Tax-Free Components: Always tax-free.
- Taxable Components (Taxed Element):
- Under Preservation Age: Tax rate up to 20%.
- Preservation Age to 60: First $245,000 is tax-free; amounts above taxed at 15%.
- 60+: Tax-free.
- Taxable Components (Untaxed Element):
- Untaxed Plan Cap Amount for 2025FY: $1,780,000.
- Under Preservation Age: 30% up to the cap; 45% above the cap.
- Preservation Age to 60: 15% up to the low-rate cap, then 30% up to the untaxed cap, and 45% beyond.
- 60+: 45% for amounts above the untaxed cap.
Income Stream Payments:
- Tax-Free Components: Always tax-free.
- Taxable Components:
- Under Preservation Age: Taxed at marginal rates unless qualifying for a 15% disability super benefit offset.
- Preservation Age to 60: 15% tax offset applies.
- 60+: Not assessable and exempt from income tax.
5. Small Business CGT Cap – Lifetime Limit
- Lifetime Cap Increase: From $1.705 million to $1.78 million for 2025FY.
- CGT Cap Election:
- Individuals must submit the appropriate form before making personal contributions using proceeds from the sale of eligible small business assets.
- Contributions will count as non-concessional if the election is made after the contribution.
Planning Ahead
The 2025 financial year brings important regulatory updates for SMSFs, highlighting the need for strategic planning and compliance. SMSF trustees and financial professionals should adjust their strategies to align with these changes to maximise retirement benefits while minimising tax obligations. Consult a qualified financial adviser or SMSF specialist for personalised advice.
Key SMSF Changes Taking Effect in 2026
Recent SMSF legislation changes introduce new tax measures and reporting requirements that trustees and professionals must prepare for ahead of the 2026–27 financial year.
Better Targeted Super Concessions (Division 296)
Better Targeted Super Concessions is now law and will apply from 1 July 2026, introducing additional tax obligations for individuals with higher superannuation balances.
From the 2026–27 financial year, individuals with a total super balance (TSB) exceeding $3 million will be subject to a 15% tax on earnings related to the portion above this threshold. For balances exceeding $10 million, an additional 10% tax will apply to the relevant earnings.
For future years, liability will be assessed based on the higher of the TSB immediately before or at the end of the financial year. These thresholds will also be indexed to inflation, increasing incrementally over time.
Updates to Total Super Balance Calculations
From 1 July 2026, the definition of total super balance will change, affecting how balances are calculated and reported.
- TSB will be based on the combined value of all Australian superannuation interests
- Annual valuation requirements will apply
- The link to the transfer balance account will be removed
- Foreign superannuation interests will be excluded from TSB calculations
These changes form part of SMSF auditor compliance updates and will impact how trustees manage reporting and valuation processes moving forward.
New Reporting Requirements for SMSFs
With the introduction of Division 296, SMSFs will be required to report additional information where members exceed the large super balance threshold. These changes introduce greater scrutiny on high-balance accounts and place increased importance on accurate data collection and reporting processes.
This means trustees and SMSF auditors must ensure accurate and timely reporting through the SMSF annual return from the 2026–27 financial year onwards. This includes maintaining up-to-date member balances, ensuring proper documentation and aligning reporting with updated regulatory expectations.
Staying aligned with evolving SMSF compliance updates will be critical to avoid errors, reduce compliance risk and ensure all regulatory requirements are met.
Low-Income Superannuation Tax Offset Changes
From 1 July 2027, updates to the Low Income Superannuation Tax Offset (LISTO) will take effect:
- The income threshold will increase from $37,000 to $45,000
- The maximum payment will increase to $810
These changes aim to align with broader tax settings and support individuals with lower incomes in building their superannuation balances.
Preparing for Future SMSF Regulatory Changes
As SMSF legislation changes continue to evolve, trustees and professionals must take a proactive approach to planning, compliance and reporting. Understanding valuation requirements, audit expectations and governance responsibilities will become increasingly important as regulatory scrutiny continues to increase.
With upcoming changes to auditing standards taking effect from 1 July, firms should also review their current audit arrangements. In-house audits may be at risk of not complying with the Code, making it important to assess whether external audit support is required.
If your firm is considering this shift, understanding the key requirements when selecting an SMSF auditor will help ensure compliance while maintaining the quality and integrity of your audit process.
About National Audits Group
At National Audits Group, we are your trusted SMSF audit and compliance partner. We work closely with accounting firms to provide high-quality, cost-effective SMSF audits. Let us handle your audit needs while you focus on delivering the best service to your clients.