With confirmed measures such as personal tax cuts and new aged care rules, and expected adjustments to contribution caps and total super balance thresholds, advance planning will help clients navigate complexity and build financial confidence.
Catch-up concessional contributions before 30 June
Clients with unused concessional contribution (CC) cap amounts from 2020-21 have until 30 June 2026 to use them, as these amounts expire after five years. Making catch-up CCs in 2025-26 can help eligible clients manage tax and maximise super contributions. This may also be the last opportunity for clients whose total super balance (TSB) will exceed $500,000 from 30 June 2026 to take advantage of this strategy.
Potential increases to contribution caps
Current average weekly ordinary time earnings (AWOTE) data suggests super contribution caps may index from 1 July 2026. If confirmed, the annual CC cap could rise from $30,000 to $32,500, and the annual non-concessional contribution (NCC) cap from $120,000 to $130,000. The maximum bring-forward NCC could increase to $390,000.
Keeping an eye on these changes now can help position clients to act quickly when new limits apply and ensures that any advice provided this side of 1 July maximises total contribution opportunities.
Transfer balance cap considerations
The general transfer balance cap (TBC) may index from $2 million to $2.1 million on 1 July 2026, depending on consumer price index data. If this occurs, clients who have not fully utilised their personal TBC could transfer additional amounts into retirement phase. For those considering a pension start or refresh, timing will be key to maximising entitlements.
Personal income tax cuts
From 1 July 2026, the lowest marginal tax rate will reduce from 16 per cent to 15 per cent (and to 14 per cent from 1 July 2027) for taxable income between $18,201 and $45,000. While this provides modest relief for most taxpayers, it may reduce the tax benefit of personal deductible contributions for lower-income clients. Advisers should consider alternative strategies such as personal contributions that may qualify for a government co-contribution.
Payday Super – payment timing changes
From 1 July 2026, employers will need to make superannuation guarantee (SG) payments within seven days of paying salary and wages, rather than quarterly. This change will require updates to payroll systems and processes. For clients who own businesses, planning ahead will be essential to ensure compliance while managing cash flow effectively.
Division 296 tax
The proposed Division 296 tax, applying to super balances above $3 million, is now scheduled to commence on 1 July 2026. The government has indicated changes to the calculation method, including removing unrealised capital gains and introducing an additional $10 million threshold. While legislation is still pending, understanding the potential impact now will help high-balance clients prepare for what may be ahead.
New Aged Care Act and fee structure
The new Aged Care Act 2024 commenced on 1 November 2025 and introduced significant changes for clients entering residential care from that date. While the basic daily fee remains, new fees such as the Hotelling Contribution (HC), Non-clinical Care Contribution (NCCC), and Higher Everyday Living Fee (HELF) now apply. These changes replace previous arrangements like the means-tested fee and extra services fee, making it important to factor aged care costs into broader planning.
Impact of deeming rate increases
With the freeze on deeming rates lifted and recent increases implemented, further adjustments may occur in 2026. Higher deeming rates can affect income-tested pension entitlements, concession card eligibility and aged care fees, as certain income assessments are based on deeming. Staying alert to these changes will help manage cash flow and affordability for clients relying on these benefits.
With key reforms and adjustments taking place this year, there are several opportunities to implement approaches that can have a real impact on client outcomes. Taking steps now to align strategies with upcoming changes will help clients stay ahead, make confident decisions and secure a stronger financial position well before key deadlines arrive.
Chris Chow, senior technical services manager, MLC
