The month of June brought with it steady gains on the U.S. and Australian markets, somewhat hampered by uncertainty in the Middle East. The RBA will be meeting on 7-8 July, with a rate cut of 0.25% predicted by most economists. As always, if you have any questions about how this may affect you, please feel free to reach out to us.
The new financial year also brings with it changes to superannuation.
I have included three articles below that go into further detail on these topics.
1. As discussed, the below article introduces you to Andrew Pike, one of the mortgage brokers at Avondale Finance. We look forward to introducing him to more of you as you come through our office.
2. The new financial year brings with it additional changes to superannuation. This article explains the changes in greater detail.
3. With a lot of media focus on the proposed tax for super balances above $3 million, this article cuts through the noise, and dives into who will be affected by this proposed tax increase, how the tax will be calculated, and ways to navigate the proposed changes. It must be noted that this tax has still not been signed into law, and is subject to changes.
Spotlight on Andrew Pike – Mortgage Broker at Avondale Finance
Andrew has been with Avondale Finance for close to two years as a mortgage broker, working alongside Matthew Nott and Richard Lee. With over 5 years of experience in the accounting industry, Andrew brings to Avondale Finance the ability to connect with clients, understand their needs, and provide them with unique solutions to achieving the outcomes clients desire. Andrew prides himself on assisting first home buyers in getting into the housing market. As a qualified Mortgage broker, Andrew holds a Diploma in Finance and Mortgage Broking from Kaplan.
Outside of work, Andrew is an avid soccer player for his local team, and has a great appreciation for the outdoors. On weekends, Andrew enjoys being out in nature on bushwalks, hikes, and the occasional camping trip.
Andrew can be reached either by email at andrew.pike@avondalefinance.com.au or via his mobile phone 0493 263 557 if you, or anyone you may know, wishes to discuss obtaining a home loan, or having a complimentary review of your current home loan. We look forward to introducing more of you to Andrew when you are in the office.
Your future just got a super boost – are you ready?
With the new financial year comes a fresh wave of superannuation changes that could make a real difference to your retirement savings.
Let’s unpack what’s changing – and how to make the most of it.
The SG rate hits 12%
One obvious lift to retirement incomes is the increase in the Super Guarantee (SG) rate from 11.5 per cent to 12 per cent. That means more going into your super account.
Your employer must now pay 12 per cent of your ordinary time earnings into your chosen super account. So, it’s a good idea to check your first payslips for the new financial year to make sure the changed rate is applied.
If you have a salary sacrifice arrangement, note that the SG calculation applies to your total salary, as if the arrangement was not in place.
For a quick update on what the change will look like for your super balance, check the MoneySmart calculator.
More for retirement phase
Beyond your regular contributions, the amount of super that can be transferred into the retirement phase – known as the general transfer balance cap (TBC) – has increased from $1.9 million to $2 million from 1 July 2025.i
If you exceed the cap, you’ll need to transfer the excess back to your accumulation account or withdraw it as a lump sum – plus, you may pay tax on the earnings.
If you’ve already started a retirement income stream, you’ll have a personal TBC – your own individual limit, which may be less than the general TBC. Your personal cap is based on the general cap at that time you started, adjusted for how much you’ve used and any indexation you’re entitled to.ii
For example, if you started a pension with $2 million on 1 July 2025, you’ve used your entire cap. The cap doesn’t limit the amount you can hold in super. If you have more than the cap available, the remainder can be left in your super fund’s accumulation account.
You can check your cap in ATO online services, which records all the debits and credits that make up your balance.
Special rules apply for defined benefit income streams.
More qualify for after-tax contributions
The change in the general TBC to $2 million may also allow you to increase non-concessional (after-tax) contributions using the bring-forward rule. While the $120,000 annual limit on non-concessional contributions hasn’t changed, eligibility for using the bring-forward rule now applies to those with a total superannuation balance below the general TBC of up to $2 million.
The rule allows you to bring forward the equivalent of one or two years of your annual non-concessional contributions cap ($120,000), allowing you to make contributions two or three times more than the annual cap.
No change to contribution caps
While more investors may now be eligible to access the bring-forward rule, the caps on both concessional (before tax) and non-concessional contributions haven’t changed.
The tax paid on contributions depends on whether you’re paying from before-tax or after-tax incomes, you exceed the contribution caps, or you’re a high income earner.iii
The concessional contributions cap is $30,000 and if you have unused cap amounts from previous years, you may be able to carry them forward to increase your contribution in later years. You can make up to $120,000 in non-concessional contributions each financial year and you may be eligible for the bring-forward rule allowing up to $360,000 in one contribution.
Not sure how the rules affect you? Talk to us today about how to stay ahead and make the most of your retirement savings plan.
Awaiting the new $3m tax
The proposed new tax on earnings above $3 million in super accounts, known as the Division 296 tax, has not yet been ratified by Parliament. Nonetheless, it is expected to be applied from 1 July 2025.
The new tax doubles the tax rate from 15 per cent to 30 per cent for earnings on balances that exceed $3 million.
An earnings loss in a financial year, can be carried forward to reduce the tax liability in future years.
ii Calculating your personal transfer balance cap | ATO
iii Concessional and non-concessional contributions | ATO
How the $3m super tax may affect you (and what to do next)
As the federal government moves to introduce a new 15 per cent tax on superannuation earnings above $3 million (known as Division 296 tax), concerns and debates have emerged about the broader implications for investment strategies, retirement planning, and even the property market.
It is intended that once passed by Parliament, the new tax – which doubles the tax rate from 15 per cent to 30 per cent for balances that exceed $3 million – will apply from July 1, 2025.
The tax change is expected to directly affect less than 0.5 per cent of investors or around 80,000 people.i
Treasurer Jim Chalmers describes the increase as “a modest change” that will make “concessional treatment for people with very large superannuation balances still concessional but a little bit less so”.ii
He says it will help fund other priorities such as Medicare, cost-of-living relief and tax cuts.
The Grattan Institute says tax breaks on super contributions cost the federal budget nearly $50 billion in lost revenue each year.iii
The Institute says that, while super is intended to help fund retirement, it has become a “taxpayer-subsided inheritance scheme”. By 2060, Treasury expects one-third of super withdrawals to be as bequests – up from one-fifth today.
How will the rate be calculated?
The formula for the additional tax payment due calculates the difference between the member’s total superannuation balance for the current and previous financial years and adjusts for net contributions (which excludes contributions tax paid by the fund on behalf of the member) and withdrawals.
An earnings loss in a financial year, can be carried forward to reduce the tax liability in future years.
The calculation of earnings includes all unrealised gains and losses.
Implications for investors
The Grattan Institute says taxing capital gains as they increase removes incentives to “lock in” investments. “But it can create cash flow problems for some self-managed super fund (SMSF) members who hold assets such as business premises or a farm in their fund,” the Institute says.iv
Many commentators speculate there will be a major change to asset allocation in super, particularly in SMSFs, as a result of the move to tax unrealised gains.
Meanwhile, one property analyst predicts a structural shift in property investment with commercial real estate becoming more attractive because of its stronger income yields relative to capital growth.v
The new tax could also reduce the appeal of super as an inheritance tool with investors likely to explore alternative wealth transfer methods.
Navigating the changes
With the tax changes looming, we’re helping clients to ensure their portfolios will continue to meet their expectations.
For those looking to minimise their exposure to the tax, there are a number of strategies that may be useful.
These include:
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Diversifying investments outside of superannuation by, for example, making direct investments in equities, bonds or private businesses.
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Considering alternative retirement savings vehicles such as family trusts.
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Actively planning to optimise tax efficiency by, for example, structured withdrawals to keep balances below the $3 million threshold, making use of tax exemptions and considering asset reallocation.
The new tax marks a significant shift in Australia’s retirement savings landscape. While the government argues that the measure is modest and targeted, its long-term implications—particularly the taxation of unrealised gains—could reshape investment strategies for high-net-worth investors.
For those nearing retirement with a high super balance, careful financial planning will be essential and all investors who could potentially be affected, should be reassessing their portfolios and weighing up whether alternate wealth management strategies may be an option.
Please get in touch if you would like help to navigate the changes.
i Better targeted superannuation concessions – factsheet (PDF)
ii Interview with Michelle Grattan, Politics podcast, The Conversation | Treasury Ministers
iii, iv Tax reform will make super fairer and the budget stronger – Grattan Institute
v $3 million superannuation tax change sparks property warning as ‘panic’ selling begins
