Disclaimer: This article provides general information only and does not consider your personal circumstances or financial situation. Before making any financial decisions, you should consider seeking advice from a licensed financial adviser. The information is current as of December 2025 and is subject to change
The Super Guarantee is Now 12%
Since 1 July 2025, the Superannuation Guarantee (SG) rate has reached its legislated maximum of 12%. After a journey that started at 4% back in 1992, every eligible employee now receives 12% of their ordinary time earnings as compulsory employer contributions.
Contribution Caps for 2025-26
The ATO has confirmed the following caps for the current financial year:
Concessional (Before-Tax) Contributions: $30,000
This covers employer contributions, salary sacrifice arrangements, and any personal contributions you claim as a tax deduction. These contributions are taxed at 15% within your super fund, making them tax-effective for most Australians.
Non-Concessional (After-Tax) Contributions: $120,000
This is for contributions made from your after-tax income. If you’re under 75, the bring-forward rule lets you contribute up to $360,000 over three years—handy if you’ve received an inheritance or work bonus.
Important: If your total super balance was $2 million or more on 30 June 2025, your non-concessional cap is nil for this financial year.
Important Note for High Earners
The maximum contribution base has decreased to $62,500 per quarter (down from $65,070). This means the maximum SG contribution per employee per quarter is $7,500, keeping annual contributions within the $30,000 concessional cap.
Transfer Balance Cap Increases to $2 Million
From 1 July 2025, the transfer balance cap—which limits how much you can move into tax-free retirement accounts—jumped from $1.9 million to $2 million. This gives retirees more flexibility and allows them to shelter more retirement savings from tax on investment earnings.
Timing matters here. If you started a retirement income stream before 1 July 2025, you locked in a personal cap based on $1.9 million. Those starting from 1 July 2025 onwards benefit from the higher $2 million cap. The transfer balance cap is indexed to inflation in $100,000 increments, so future increases will only occur when inflation reaches the required threshold.
Super on Paid Parental Leave: A Win for Families
This is a game-changer for new parents. For babies born or adopted on or after 1 July 2025, eligible parents will receive an additional 12% superannuation contribution on their government-funded Paid Parental Leave.
This reform addresses a persistent gap in retirement savings, particularly for women who typically serve as primary caregivers. Parents receiving the full 24 weeks of Paid Parental Leave will receive approximately $2,637.50 in superannuation contributions, paid by the ATO as a lump sum after the end of the financial year.
The best part? It’s automatic. No application required—the contribution goes straight to the super fund where your regular contributions are directed. Over the course of raising a family, this measure is estimated to leave parents around $7,500 better off in retirement.
Looking Ahead: Payday Super Starts July 2026
Mark this date: 1 July 2026. From that day, employers will be required to pay superannuation contributions on payday—not quarterly. This legislation has now passed into law and represents one of the most significant super reforms in decades.
What this means for employees:
- Super paid with every pay cycle, not quarterly
- Contributions must reach your super fund within 7 business days of payday
- Earlier compounding of investment returns
- Better visibility of whether your employer is meeting their obligations
Research suggests a 25-year-old median income earner could be approximately 1.5% better off at retirement by receiving super contributions on payday rather than quarterly.
What this means for employers:
- You’ll need to update payroll systems and adjust cash flow management
- Single Touch Payroll (STP) reporting must be configured correctly
- Employers who miss the deadline will be liable for the Superannuation Guarantee Charge (SGC), which includes the unpaid amount, daily interest, and administrative penalties
- The ATO’s Small Business Superannuation Clearing House closes on 1 July 2026, so businesses using this service need alternative solutions
Good News for Employers
The ATO has released draft compliance guidance indicating a practical approach for the first year, recognising that employers making genuine efforts to comply shouldn’t be the focus of compliance action.
Other Key Points to Remember
Government Co-Contribution
If you earn $62,488 or less and make after-tax contributions to your super, the government will chip in up to 50 cents for every dollar you contribute, capped at $500 per year. It’s free money—worth considering if you’re eligible.
Work Test (Ages 67-74)
If you’re in this age bracket and want to make personal deductible contributions, you must work at least 40 hours during a consecutive 30-day period in the financial year, or meet the work test exemption criteria.
Carry-Forward Provisions
If your total super balance was less than $500,000 on 30 June 2025, you can carry forward unused concessional contributions from the previous five years. This is particularly useful for those with fluctuating incomes or career breaks.
What You Should Do Now
For Everyone
- Check your super statements to confirm the 12% SG rate is being applied correctly
- Review your contribution caps if you’re making additional contributions
- Consider whether salary sacrificing could benefit your tax position
For New or Expecting Parents
- Ensure your super fund details are current with Services Australia
- Confirm your details with the ATO are correct and matching
For Employers
- Start preparing for payday super now—don’t wait until June 2026
- Engage with payroll providers about system updates
- Review cash flow projections for more frequent super payments
- If using the Small Business Superannuation Clearing House, arrange alternative clearing house services before July 2026
For Those Approaching Retirement
- Consider the timing of commencing retirement income streams in relation to the transfer balance cap
- Review whether additional contributions before June 2026 could benefit from current caps
- Assess whether you’ll benefit from proportional indexation of your personal transfer balance cap
The Bottom Line
The superannuation system continues to evolve with the goal of providing Australians with financial security in retirement. The changes happening now—from the 12% SG rate to super on parental leave and the upcoming payday super reforms—represent genuine improvements to retirement outcomes.
These updates affect different Australians in different ways. Younger working families benefit from the payday super changes and parental leave contributions. Those with higher incomes or substantial savings may focus more on contribution caps and transfer balance changes. The beauty of super is that it works for everyone at every stage of life.
Given the complexity of these changes and their potential impact on your individual circumstances, we strongly recommend speaking with a financial adviser who can provide personalised guidance tailored to your situation, goals, and stage of life.
