What changed in superannuation on 1 July 2025

If you have been watching the transfer balance cap, the number that matters to you is probably not $2 million.

The general transfer balance cap rose from $1.9 million to $2 million on 1 July 2025. Your own cap moved by a share of that $100,000, and the share depends on how much of your cap you have never used. Three other things changed on the same date: the superannuation guarantee reached 12%, super began accruing on government Parental Leave Pay, and the contribution caps held where they were.

Here is how each of them works, and where the proportional calculation catches people out.

The superannuation guarantee reached 12%

From 1 July 2025 the minimum superannuation guarantee is 12% of an employee's ordinary time earnings. That is the last step in a schedule that has been lifting the rate half a percentage point each year since 1 July 2021, and the ATO's super guarantee rate table shows 12% applying to 2025-26 and to every later period in the table.

For an employee, the effect is quiet and cumulative. On $90,000 of ordinary time earnings, 12% is $10,800 a year, against $10,350 at the old 11.5% rate. The extra $450 lands in your fund rather than your bank account, and it counts towards your concessional contributions cap.

For an employer, two details cause most of the errors we see.

• The rate follows the payment date, not the work date. The ATO's guidance on how much super to pay works through a monthly payroll covering 22 June to 19 July 2025 that is paid on 20 July. Because payment happens after 1 July, the whole amount attracts 12%, including the June portion.
• The maximum contribution base fell. For 2025-26 it is $62,500 of ordinary time earnings a quarter, down from $65,070 in 2024-25, which caps employer super at $7,500 a quarter for a high earner. Across four quarters that is $30,000, which is exactly the concessional contributions cap.

Contributions must still reach the fund within 28 days of the end of each quarter, and missing that date turns an ordinary contribution into a superannuation guarantee charge, which costs more than the contribution would have. If your payroll system did not pick the new rate up on the first pay run after 1 July, that is a bookkeeping correction worth making before the quarter closes rather than after.

The general transfer balance cap rose to $2 million

The transfer balance cap is the lifetime limit on how much superannuation you can move into retirement phase, where the fund pays no tax on earnings. The ATO's transfer balance cap thresholds record the general cap at $1.9 million for 2023-24 and 2024-25, and $2 million from 2025-26. It is indexed to the consumer price index in $100,000 increments, which is why it moves in jumps rather than every year.

If you start a retirement phase income stream for the first time on or after 1 July 2025, your personal cap is the general cap on that day: $2 million.

If you already had one running, your personal cap is your own number. It is almost certainly not $2 million, and it may not have moved by anything close to $100,000.

Why your personal cap did not rise by the full $100,000

To follow the calculation you need one mechanism first: the transfer balance account.

Your transfer balance account is credited when you move money into retirement phase and debited when you commute an amount back out. Investment returns after that do not move it in either direction. A pension that grows does not consume more cap, and a pension that falls does not hand cap space back.

Indexation is then worked out on the highest ever balance of that account, not on the balance sitting there today. Think of it as a high-water mark on a jetty pile at Broadwater: the tide going out does not lower the mark.

The ATO's page on calculating your personal transfer balance cap sets out three steps.

1. Divide the highest ever balance of your transfer balance account by your personal transfer balance cap on the first day you held that balance. 2. Express that as a percentage and round it down to the nearest whole number. That is the proportion of your cap you have used. 3. Subtract it from 100. That is your unused cap percentage, and your personal cap rises by that percentage of the $100,000 increment.

Two edges follow from this. If your highest ever balance equals or exceeds your personal cap, you get no indexation at all, and commuting the pension beforehand does not change that. If you have never started a retirement phase income stream, none of it applies and you have the full $2 million.

The step people misread is the divisor in step one. It is your personal cap on the day you hit your high-water mark, not the general cap now and not $2 million. If your cap has been indexed before, the divisor is that already-indexed personal figure.

A worked example

Take Marion, aged 64 and living at Robina. This is an example rather than a client.

Marion started an account-based pension on 1 October 2023, valued at $1,240,000. The general cap that day was $1.9 million, so her personal cap was $1.9 million as well. She has made no other transfers into or out of retirement phase.

• $1,240,000 divided by $1,900,000 is 0.6526.
• As a percentage that is 65.26%, rounded down to 65% used.
• 100 minus 65 leaves an unused cap percentage of 35%.
• 35% of the $100,000 increment is $35,000.

From 1 July 2025 Marion's personal transfer balance cap is $1,935,000. Not $2 million, and not the $1.9 million she started with.

Two things are worth drawing out of that. The rounding runs slightly in her favour: rounding the used percentage down from 65.26% to 65% leaves her with 35% unused rather than the 34.74% an unrounded calculation would give, and that is worth about $260 of extra cap. And the gap does not close. Her available cap space is $1,935,000 less the $1,240,000 in her transfer balance account, so $695,000. Someone starting a first pension on 2 July 2025 has $2 million of space. Unless Marion's transfer balance account changes, the same 35% applies at the next indexation too, because what indexes is the percentage rather than a dollar amount.

You can see your own personal cap, your transfer balance account and your available cap space in ATO online services through myGov. If the pension is being paid from a self-managed fund, the reporting that feeds those figures comes from the fund's own transfer balance account reporting, which is part of the annual SMSF work rather than something the ATO calculates unaided.

Super is now paid on government Parental Leave Pay

If you care for a child born or adopted from 1 July 2025 and you receive Parental Leave Pay from Services Australia, the ATO pays a Paid Parental Leave Superannuation Contribution into your fund.

The ATO's guidance on the Paid Parental Leave Superannuation Contribution sets out the mechanics. It is based on the superannuation guarantee rate, so 12% of the Parental Leave Pay received, and it includes an interest component. It is paid as a lump sum after the end of the financial year in which the Parental Leave Pay was received, which means the first contributions for 2025-26 will be paid during 2026-27. It is taxed at 15% in the fund and counts towards your concessional contributions cap. Where Parental Leave Pay is shared, each person's fund is paid on their portion.

Two practical points follow. Your name and address need to match across Services Australia, the ATO and your super fund, and your fund needs your tax file number, or additional tax applies. And for employers, nothing changes: the contribution comes from the ATO directly, not from payroll.

The contribution caps for 2025-26

The caps themselves did not move. The ATO's contributions caps thresholds confirm the figures.

• Concessional contributions: $30,000, unchanged from 2024-25. This covers employer superannuation guarantee, salary sacrifice and personal contributions you claim as a deduction. Unused amounts from up to five earlier years can be carried forward if your total superannuation balance was under $500,000 at 30 June 2025.
• Non-concessional contributions: $120,000, unchanged. If you were under 75 at any point in the year, up to three times the annual cap can be brought forward into one year, so $360,000, with the amount available depending on your total superannuation balance at 30 June 2025.

The rise in the general cap does something to those caps that is easy to miss. Your non-concessional cap is nil for a year if your total superannuation balance at the end of the previous year was equal to or above the general transfer balance cap. That gateway moved from $1.9 million to $2 million on 1 July 2025.

The bring-forward tiers move with it, because they are set by reference to the general cap less one and two years of the annual cap. Do the subtraction at a $2 million general cap and a $120,000 annual cap: $2 million less two years of the cap is $1.76 million, and less one year is $1.88 million. Below $1.76 million the full three years is available, between $1.76 million and $1.88 million it is two, between $1.88 million and $2 million only the annual cap applies, and at $2 million or above the cap is nil.

One more piece of arithmetic worth noticing. At the maximum contribution base, employer superannuation guarantee alone now uses $30,000 across the year, which is the entire concessional cap. Salary sacrifice on top of that is excess.

Three numbers worth knowing before you act

None of this tells you what to do, and it is not meant to. It does tell you which of your own figures decide the answer.

• Your personal transfer balance cap and available cap space, from ATO online services, before any change to a pension.
• Your total superannuation balance at 30 June 2025, measured against $500,000 for carry-forward and against $2 million for the non-concessional gateway.
• Your year-to-date concessional contributions, now that the guarantee is running at 12%.

If those numbers sit close to a threshold, the sequence and timing of what happens next matters more than the amounts. That is the conversation to have with our accounting and advisory team while the year is still long enough to do something about it.