Transfer Caps, Contributions & The $3 Million Superannuation Tax: What’s Changing For SMSFs From 1 July?
What trustees and members need to know now
From 1 July 2025, several legislative changes will affect Self-Managed Superannuation Funds (SMSFs) across Australia. These updates may impact your tax position, contribution limits, pension payments, and overall compliance responsibilities.
Here’s what you need to know:
1. New superannuation tax for balances over $3 million.
From 1 July 2025, it is proposed that individuals with a total superannuation balance exceeding $3 million at the end of a financial year will be subject to an additional 15% tax on earnings attributed to the portion above that threshold.
The key points:
- The change applies to individuals, not per fund. It includes SMSFs and Australian Prudential Regulation Authority (APRA)-regulated funds, collectively.
- The tax is in addition to the existing superannuation earnings tax.
- The ATO will calculate earnings using a set formula, not just realised gains.
- You can choose to pay the tax from your superannuation fund, or personally.
Timing
The first year this measure applies is 2025–26 (based on balances as at 30 June 2026). The ATO will assess and notify individuals accordingly.
At Aintree Group, we are discussing these changes in our tax planning meetings with our SMSF clients to ensure we are ready when the change takes effect.
More details here.
2. Increase to the general transfer balance cap.
The general Transfer Balance Cap (TBC) will increase from $1.9 million to $2 million from 1 July 2025. This cap limits how much superannuation can be transferred into retirement phase income streams where earnings are tax-free.
More information here.
3. Adjustments to non-concessional contribution limits.
The increase to the transfer balance cap will affect non-concessional (after-tax) contribution limits, including eligibility for the bring-forward rule.
If your total superannuation balance on 30 June of the previous financial year is under $1.76 million, you may be able to contribute up to 3 years’ worth of after-tax contributions in one year.
Learn more here.
4. Defined benefit income cap increase.
A defined benefit pension is a type of retirement plan where an employer guarantees a specific payout to an employee upon retirement. The amount is calculated based on a formula and considers factors such as the employee’s salary history, years of service, and age.
The defined benefit income cap will rise to $125,000 (up from $118,750) for the 2025–26 financial year. This affects how defined benefit pensions are assessed against the transfer balance cap.
More details here.
5. Standard pension minimums reinstated.
Standard pension minimums refer to the minimum annual payment amounts withdrawn from an account-based pension each financial year, as required by the Australian Taxation Office (ATO).
If the total payments in an income year are less than this required minimum, the pension has not met the standard pension minimums.
Temporary COVID-19 minimum pension drawdown relief has ended, and standard minimum drawdown rates apply from 1 July 2025.
Make sure your SMSF members receiving a pension draw at least the minimum by 30 June each year, so they meet the standard pension minimums.
More information here.
Ongoing SMSF compliance obligations.
Even with new reforms, the core responsibilities of SMSF trustees remain unchanged.
Here’s a reminder of key compliance areas that should remain a priority:
Transfer Balance Account Reporting (TBAR)
Keep your reporting up to date, especially when commencing retirement phase income streams or triggering events that impact a member’s transfer balance.
Monitoring Contribution Caps
Ensure both concessional and non-concessional contributions stay within new limits, and monitor TSBs and use the bring-forward rule correctly.
Annual Obligations
- Lodge your SMSF annual return.
- Complete an independent audit.
- Maintain records for at least five years.
- Comply with investment restrictions and the sole purpose test.
Record Keeping And Trust Deed Reviews
Strong documentation is essential, so you should consider reviewing your trust deed to reflect new legislative thresholds and contribution rules.
Identity Verification
Trustees and members must meet ATO ID verification requirements. This is part of broader efforts to improve compliance and reduce financial crime risk.
Want individual advice on the 1 July SMSFs changes?
Get in touch with your Aintree Group adviser today.
This is general advice only and has not been prepared with your situation and needs in mind. For individual and personalised advice, we highly recommend that you seek out proper professional advice from your accountant.
