The 2025 financial year introduced key updates in the self-managed superannuation fund (SMSF) sector, affecting contribution caps, taxation, benefit payments, and regulatory compliance. SMSF trustees and financial professionals must stay informed 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.
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.
Mae Valencia, SMSF Auditor, National Audits Group
Further Reading:
Understanding Limited Recourse Borrowing Arrangements (LRBAs) for SMSFs
