It’s a new year – but will there be new caps?

It’s not too early to start considering the expected changes to superannuation thresholds and the impact this might have on contribution strategies. 

Based on inflation data released last week, the general transfer balance cap will increase from $2.0m to $2.1m from 1 July 2026.    

This increase may provide an opportunity in 2026/27 for individuals who will be young enough to make superannuation contributions (contributions can be accepted up to age 75) but who have previously had superannuation balances that were too high.  

For example, someone who is:

• under 75 throughout 2026/27,
• had a total superannuation balance of around $2.05m at 30 June 2025 which remains roughly the same at 30 June 2026, and
• hasn’t made non-concessional contributions in recent years

could contribute up to the non-concessional contributions cap in 2026/27 even though they can’t in 2025/26.

In fact, this change will also help those who (say) made a $200,000 non-concessional contribution in 2024/25 intending to trigger a three year bring forward period (2024/25, 2025/26, 2026/27).  They may not have been able to “finish off” that bring forward (by contributing the remaining $160,000) in 2025/26 because their balance was over $2m at 30 June 2025.  If it’s below $2.1m at 30 June 2026, they can do so in 2026/27 as long as they’re still under 75 at the time.

It’s also highly likely the contribution caps will increase as well.  Based on interim wage data and the fact these caps weren’t indexed last year, we expect the following increase from 1 July 2026:

• Concessional contributions cap – from $30,000 to $32,500, 

• Non-concessional contributions cap – from $120,000 to $130,000. 

(We won’t know this until later this month – when we do, we’ll publish an updated table showing the various thresholds that apply for bring forward periods and amounts.)

For now though, it’s worth noting that individuals looking to maximise their non-concessional contributions who have existing balances well below the threshold for using the three year bring forward rules, might benefit from a two step process:

• Make a non-concessional contribution of up to $120,000 this year; and 

• Wait until next year to make additional non-concessional contributions and bring forward the higher non-concessional contribution cap.  

This will ensure their bring forward amount is maximised - $390,000 rather than $360,000.

Finally, for those with defined benefit interests, keep an eye on the government’s draft Division 296 legislation.  In addition to introducing a new tax on members with high superannuation balances, the bill proposes significant changes to how an individual’s total superannuation balance is calculated.  Under the proposal, defined benefit funds would be required to value interests annually using actuarial factors.  If passed, this change may result in:

• Higher assessed total superannuation balances for member with defined benefit interests in accumulation phase, and

• Lower assessed balances for those with defined benefit pensions.

If the legislation is passed in its current form, the new definition of total superannuation balance will apply from 30 June 2026.

Unless some extra transitional rules are included (we’ll need to wait for the regulations before we know), this will impact contribution strategies as early as 2026/27.  For some people the new definition may mean that 2025/26 is the final financial year in which certain contribution strategies (such as making non-concessional contributions or accessing unused concessional contributions) remain available.

Dealing with clients impacted by the proposed Division 296 tax?  Be sure to join us at our Division 296 Tax Masterclass.  For further details and to register for the event, click here