Super: no new Budget changes, but important shifts taking effect

The Government made no substantive new changes to superannuation rules in this Budget, confirming only measures already legislated. However, several of those measures arrive from 1 July 2026 and are worth understanding before the financial year turns.

Contribution caps are rising through automatic indexation. From 1 July 2026, the concessional contribution cap – the limit on pre-tax contributions including employer super guarantee payments and salary sacrifice – is increasing. 

Non-concessional caps, total superannuation balance thresholds, and the transfer balance cap – the limit on how much can be moved into a tax-free retirement income stream – also increase from 1 July 2026. 

For clients in a position to contribute meaningfully or who are approaching the transfer balance cap, these increases create additional opportunity that is worth reviewing before 30 June.

Payday super is also commencing from 1 July 2026. Under the new rules, employers will be required to pay their employees’ super guarantee contributions at the same time as wages rather than quarterly. For most employees this is simply an administrative change – but it does mean super funds will receive contributions more frequently, which has a modest but positive effect on compounding over time. For business owners, it is worth confirming payroll systems and processes are aligned before the start date.

Division 296: the tax on large super balances begins

From 1 July 2026, an additional tax – known as Division 296 – applies to superannuation earnings on the proportion of a member’s balance that exceeds $3 million. 

The existing 15 per cent earnings tax on super balances below that threshold remains unchanged. Division 296 adds a further 15 per cent to earnings on the proportion above $3 million, bringing the total effective earnings tax rate on that portion to 30 per cent. 

For members with balances above $10 million, the total Division 296 tax rises to 25 per cent – meaning total earnings tax of 40 per cent on that balance portion.

The tax is applied to the proportion of earnings attributable to the balance above the threshold, not to the entire fund. This measure was announced in early 2023 and has since passed through Parliament. 

For clients approaching or above the $3 million threshold, reviewing the position and modelling the impact on retirement planning is timely – the first tax assessments are expected to be issued in 2027-28. It is also worth noting that the regulations supporting this legislation are not yet finalised, and certain details – including the treatment of death benefits – are still to be confirmed at the time of writing.

Super and the CGT changes: a more attractive environment

One consequence of the Budget’s proposed CGT reforms that has attracted considerable attention is the relative improvement in super’s position as a wealth accumulation vehicle. Outside super, the 50 per cent CGT discount is being replaced for individuals, trusts, and partnerships. Inside super, the existing one-third CGT discount is retained – meaning superannuation funds continue to pay a concessional rate on capital gains under the same rules as today.

For clients with significant investment assets held outside super, should the proposed changes come into effect, this shift in relative tax treatment is worth factoring into longer-term wealth structuring conversations. 

It does not change the rules governing how much can go into super, but it does change the calculus around where future wealth accumulation may be most effectively positioned – particularly for growth assets with significant capital appreciation potential.

Aged care: expanded funding and important changes to at-home support

The Budget includes a $3.7 billion investment in the aged care sector, with funding directed toward additional residential aged care beds, improved care standards, and regulatory oversight. 

Private health insurance: reduced rebate and a Lifetime Health Cover caution

From 1 April 2027, the private health insurance rebate for Australians aged over 65 will reduce to align with the standard rate that applies to younger Australians. The exact rebate percentages that will apply from that date are not yet known, though income tiers will continue to apply. 

The overseas pension supplement extension – and a note for those moving permanently

From 20 September 2026, the Government proposes to extend payment of the full Pension Supplement from six weeks to 12 weeks for recipients who travel overseas temporarily. After 12 weeks, the supplement ceases. This provides additional support for the approximately 92,000 pensioners who travel for more than six weeks each year – visiting family or taking extended holidays.

However, there is an important distinction for those planning a permanent move overseas. Age Pensioners and Disability Support recipients who relocate permanently will no longer receive the Pension Supplement Basic amount – a payment that was previously paid indefinitely alongside the primary payment. For clients or their family members considering an overseas retirement, this change could be worth factoring into planning conversations.

The CGT picture for retirees

For retirees with investment assets held outside of superannuation – including investment properties, shares, and other CGT assets – the proposed changes to CGT discussed elsewhere in this Budget are directly relevant. The 30 per cent minimum tax on real capital gains will apply from 1 July 2027 for individuals. Retirees who have historically managed the timing of asset sales to realise gains in low-income years will find that strategy less effective under the new rules.

Reviewing the retirement picture

With this year’s Budget, superannuation itself remains largely unchanged. What is shifting, however, is the environment around it – and specifically, how attractive holding assets inside super will be compared to holding them outside it. That’s the change worth paying attention to.

It’s important to note that all proposed changes were yet to be legislated at the time of writing. While being across your position and aware of potential regulatory shifts is always worthwhile, any significant decisions should wait until the finer details are confirmed in the final legislation.

If you’d like to talk through what any of this means for your retirement strategy specifically, we’re ready for that conversation. Book a 15-minute chat with our team.