Essential SMSF Changes Coming in 2025 You Need to Know

The wave of superannuation reforms that took effect from 1 July 2025 has already reshaped how SMSF trustees manage their retirement savings: the super guarantee rose to 12%, super began being paid on government-funded parental leave, and the transfer balance cap increased, while the long-debated tax on balances over $3 million has since been legislated separately as Division 296. This article works through what changed, what is now settled law versus what came later, and what SMSF trustees should be doing about it to stay compliant.

Overview of Upcoming Changes

The impending changes to superannuation law are set to transform the landscape of retirement savings in Australia. Some of the key adjustments include:

• Increase in Super Guarantee
• Inclusion of Super on Paid Parental Leave
• Revised Tax Rates for High Super Balances
• Changes to the Transfer Balance Cap

1. Increase in Super Guarantee

One of the most significant changes concerns the Superannuation Guarantee (SG). From 1 July 2025, the contribution rate employers must pay into their employees’ super funds rose from 11.5% to 12%, and the ATO confirms this was the final scheduled increase. This increase helps Australians save more for their retirement, easing the financial pressures associated with an ageing population.

This adjustment means employees receive a higher percentage of their wages contributed to their superannuation accounts. For SMSF trustees, this is a welcome development, as it may lead to an overall increase in the fund value over time.

2. Inclusion of Super on Government-Funded Paid Parental Leave

Another noteworthy change is the inclusion of superannuation on government-funded Paid Parental Leave (PPL). If a person cares for a child born or adopted from 1 July 2025 and receives Parental Leave Pay from Services Australia, the ATO pays a Paid Parental Leave Superannuation Contribution directly into their super fund as a lump sum after the end of the financial year, with payments starting in the 2026-27 financial year. Previously, no superannuation was paid during PPL, which deprived new parents of crucial retirement savings during a pivotal time in their lives.

This contribution enhances retirement savings and safeguards new parents’ financial future, and it aims to promote gender equity and encourage workforce participation among new parents.

3. Revised Tax Rates for High Super Balances

One of the most debated changes, a tax on high superannuation balances, is no longer a proposal. Division 296 is now law and took effect from 1 July 2026, with 2026-27 as the first income year it applies to. For total super balances above $3 million, an extra 15% tax applies to earnings attributable to the amount over that threshold, taking the effective rate to 30% on that portion, rising to an extra 25%, an effective 40%, on earnings attributable to balances above $10 million. Both thresholds are indexed, and the tax applies to realised earnings only, such as interest, dividends and realised capital gains, not unrealised gains.

This tax structure has significant implications for SMSF trustees managing larger funds, and requires careful planning to manage potential tax liabilities on investment growth.

4. Changes to the Transfer Balance Cap

The Transfer Balance Cap plays a pivotal role in retirement planning for SMSF members. This cap limits the amount of money that can be transferred into the tax-free retirement phase, where investment returns are generally more favourable.

The cap rose from $1.9 million to $2 million from 1 July 2025, and has since been indexed again to $2.1 million from 1 July 2026. Each increase expands the threshold, allowing SMSF members to shelter more of their retirement savings from taxation. For those nearing retirement or managing investment properties through their SMSF, this change presents additional opportunities and flexibility.

Key Considerations for SMSF Trustees

With these changes now taking effect in stages, SMSF trustees must remain vigilant and proactive in their fund management. Here are some vital considerations:

• Stay Informed: Continuously monitor updates regarding legislation and regulatory changes affecting superannuation and SMSFs.
• Review Investment Strategies: Given the tax framework for larger balances under Division 296, consider revisiting investment strategies to maximise growth while minimising tax liabilities.
• Check Borrowing Arrangements: If your SMSF holds, or is considering, a limited recourse borrowing arrangement for property, new arrangements for residential property have been banned from 10 August 2026, though existing arrangements are unaffected. See our analysis of the SMSF borrowing ban’s impact on off-the-plan apartments.
• Plan for Compliance: Understand compliance requirements that accompany these changes to avoid potential penalties.
• Consult Professionals: Engage financial advisors and tax professionals who specialise in SMSFs to ensure informed decision-making.

Conclusion

The SMSF changes that took effect from 1 July 2025, together with the Division 296 tax that commenced from 1 July 2026, represent a significant shift in Australia’s superannuation landscape. Between the contribution rate, superannuation on parental leave, tax on large balances, and the transfer balance cap, trustees need to be proactive in their approach to fund management.

By staying informed and adapting their strategies, SMSF trustees can effectively navigate these changes and continue to grow their retirement savings for long-term financial security. Make sure your SMSF is prepared for what has already changed and what is still to come.

Check out our SMSF page.

Disclaimer: This article contains general information only and does not constitute financial, legal or tax advice. It has been prepared without regard to your objectives, financial situation or needs. Tax and superannuation laws change frequently, and the information in this article may not reflect the current law or may become inaccurate over time. Before acting on anything in this article, you should consider its appropriateness to your circumstances and seek advice from a registered tax agent or qualified adviser.