Jenny Pearse

Superannuation remains one of the most powerful long-term wealth-building tools available to Australians. But as the system grows, now representing more than $3.5 trillion in retirement savings, governments periodically adjust the rules that govern how it operates.

Recent developments around superannuation caps and proposed tax changes have generated significant commentary. What has actually changed, and what does it mean for your strategy?

Contribution Caps Remain an Important Planning Tool

Superannuation contribution caps continue to shape how individuals can add to their retirement savings. The caps for this financial year and the next financial year are outlined in the table below.

Contribution Type	Annual Limit – FY26	Annual Limit – FY27
Concessional Contributions	$30,000	$32,500
Non-Concessional Contributions	$120,000	$130,000
Bring-Forward Non-Concessional	Up to $360,000 (over 3 years) *	$390,000

*Eligibility depends on age and total super balance.

These limits are designed to balance two objectives: encouraging retirement savings while maintaining fairness in the tax system. They still represent a valuable opportunity to build tax-efficient retirement wealth over time.

Division 296 Has Now Passed

One of the most significant developments is the introduction of Division 296. This tax is payable on that portion of a member’s earnings that are attributable balances above $3m and $10m as per below.

Balance between $3m and $10m – additional 15% tax

Balance > $10m – additional 25% tax

The start date was extended by a year to 1 July 2026, with the first measure of total super balance to be 30 June 2027.

In welcome news, the tax no longer applies to unrealised capital gains, and the relevant thresholds will be indexed.

Key considerations emerging

• For balances between $3 million and $10 million, superannuation will likely remain an attractive tax structure, even with the additional tax applied to the excess portion.
• For balances above $10 million, it may be worthwhile to review how super fits within the broader wealth structure, although moving funds outside super is not necessarily the best outcome.
• Certain strategies, such as legacy pension commutations, may produce unintended outcomes under the current framework and should be reviewed carefully.

What This May Mean in Practice

While the rules are now legislated, the practical implications will vary depending on individual circumstances.

For many investors, superannuation will continue to play a central role in retirement planning.

Even with the additional tax applied to balances above $3 million, super remains a comparatively tax-efficient structure when compared with many alternative investment environments.

The key is ensuring that superannuation is considered within the context of an individual’s broader wealth plan rather than in isolation.

Maintaining Perspective

Policy adjustments within the superannuation system are not unusual.

Over the past three decades, the system has evolved regularly as governments respond to economic conditions, fiscal pressures and the growing size of the retirement savings pool.

As Andrew Sherlock, CEO of Sherlock Wealth, explains:

“Superannuation remains one of the most effective long-term savings vehicles available in Australia. While policy changes can generate headlines, they rarely change the underlying importance of long-term planning and thoughtful strategy.”

In most cases, reacting quickly to policy announcements is far less effective than reviewing how those changes interact with an existing financial plan.

Why Advice Matters

For the majority of investors, Division 296 will have no immediate impact.

For those who may be affected, the more important question is how superannuation fits within their broader financial structure.

Investment ownership, tax structures, estate planning considerations and long-term retirement objectives all play a role in determining the most appropriate strategy.

Changes to legislation can provide a useful opportunity to revisit these arrangements and ensure they remain aligned with evolving financial goals.

Final Thoughts

Changes to superannuation policy often generate attention, but they rarely alter the core principles of long-term financial planning.

With the introduction of Division 296 now confirmed, this may be an appropriate time for some investors to revisit how superannuation fits within their broader wealth strategy.

Ensuring the structures surrounding retirement savings remain aligned with both current legislation and long-term objectives can help maintain clarity and confidence in the years ahead.

Our team are here should you have any questions or concerns about how these changes may impact you.

Sources

Australian Taxation Office – Superannuation Contribution Caps
https://www.ato.gov.au

SMSF Alliance – Super Caps and Division 296 Commentary

Australian Treasury – Superannuation Policy Updates

SMSF Adviser – Industry Commentary on Division 296 Legislation
https://www.smsfadviser.com