|
2025/26 contribution caps confirmed: key NCC advice considerations
Article published on: 20-02-2025While AWOTE data released today confirms the annual super contribution caps won’t change in 2025/26, indexation of the transfer balance cap may create new or enhanced non-concessional contribution (NCC) opportunities from 1 July.
Super contribution caps and NCC thresholds in 2025/26
AWOTE data released by the Australian Bureau of Statistics (ABS) earlier today confirms that the annual contribution caps will remain at:
-
$30,000 for concessional contributions (CCs), and
-
$120,000 for NCCs.
Furthermore, in late January this year, the ABS released CPI data that confirms the general transfer balance cap (TBC) will index from $1.9m to $2m in 2025/26. As a result, the total super balance (TSB) thresholds that determine eligibility to make NCCs (including under the bring-forward rules) will increase next financial year – see table below. This is because the TSB thresholds are based on the general TBC and annual NCC cap.
Thresholds and caps in 2024/25
|
Thresholds and caps in 2025/26
|
TSB as at 30/6/2024
|
NCC cap
|
TSB as at 30/6/2025
|
NCC cap
|
$1.9m +
|
$0
|
$2m +
|
$0
|
$1.78m to < $1.9m
|
$120,000
|
$1.88m to < $2m
|
$120,000
|
$1.66m to < $1.78m
|
$240,000
|
$1.76m to < $1.88m
|
$240,000
|
< $1.66m
|
$360,000
|
< $1.76m
|
$360,000
|
NCC advice opportunities
New contribution opportunities
The increase in the TSB thresholds on 1 July 2025 may enable clients to make NCCs in 2025/26 that they can’t make in 2024/25. This would be the case if their 30 June 2024 TSB was greater than $1.9m but will be under $2m on 30 June 2025. These clients may be able to:
-
make NCCs up to the annual cap of $120,000
-
trigger the bring-forward rule (if their 30 June 2025 TSB drops below the two or three-year bring-forward TSB threshold)
-
complete a bring-forward triggered in 2023/24
-
utilise a recontribution or spouse contribution strategy, or
-
access a Government co-contribution or spouse tax offset (if eligible).
Enhanced contribution opportunities
Some clients may be able to make larger NCCs by deferring the triggering of a bring-forward until 2025/26, when the higher TSB thresholds will apply.
For example, the increased TSB thresholds for 2025/26 may allow some clients to delay triggering the three-year bring-forward while also making an NCC in 2024/25 below the annual NCC cap, provided their TSB stays below $1.76m on 30 June 2025.
Similarly, clients who are only eligible to trigger a two-year bring-forward in 2024/25 (TSB of $1.66m to < $1.78m on 30 June 2024) may consider delaying their NCC until after 1 July 2025 to see if they are eligible to trigger a three-year bring-forward in 2025/26 instead.
Furthermore, clients who are only eligible to contribute up to the annual NCC cap in 2024/25 may consider waiting to see if they are eligible to use the two-year bring-forward in 2025/26.
How to help clients track and manage their TSB
It will be important to monitor affected clients’ TSBs as we approach the key 30 June 2025 TSB date. This will enable you to determine eligibility for certain NCC opportunities in 2025/26.
Clients can track their TSB and related information through their myGov account, via a linked ATO online services account. They can also download relevant summaries you may need when providing financial advice.
ATO online services displays information about a client’s TSB as at the prior 30 June, which includes:
-
accumulation account balances
-
retirement phase income stream balances
-
outstanding balance of a limited recourse borrowing arrangement (LRBA) for SMSF members who have borrowed to invest since 1/7/2018, if the LRBA is with a related party or the member has satisfied a full condition of release
-
in transit rollovers, less
-
amounts contributed to superannuation as structured settlements.
Beware of delays in accurate TSB information in myGov
Generally, myGov is the starting point to ascertain your client’s TSB. However, APRA regulated superannuation funds have until 31 October to report TSB values as at 30 June 2025 (but have the choice to report earlier). SMSFs report a member’s TSB in the SMSF annual return which, in some cases, can be lodged up to 5 June 2026. This means there is a delay in being able to access this information via myGov.
If a contribution needs to be made early in the financial year (eg if a client is turning 75), it may be necessary to estimate their TSB at 30 June 2025 to ensure the recommended contribution strategy can be implemented without triggering an excess contribution. Possible sources of information are:
-
myGov – to assist in identifying all super interests (across accumulation and pensions)
-
your client records – again to assist in identifying all super interests
-
individual super fund(s) – either annual statements or contacting the fund to request an exit value.
Remember the TSB captures the exit value of accumulation and account based income streams, which can differ from the account balance.
If TSB estimates are used, it may be worthwhile leaving a buffer below the maximum amount. Otherwise, consider delaying contributions until later in the financial year, once the information is available on myGov.
Ways to manage a client’s TSB
If a client’s TSB is approaching a particular TSB threshold, there may be strategies that could be used before 30 June 2025 to help manage the TSB to enhance NCC opportunities in 2025/26. These may include:
-
splitting eligible CCs made in 2023/24 to a spouse if not already done (prior to 30 June 2025)
-
if a client needs additional funds in the near future (eg for upcoming expenses or as part of a spouse contribution strategy), consider making earlier withdrawals from accumulation or pension phase before 30 June (assuming the client has access to their super)
-
deferring certain contributions until after 1 July (if eligible to do so), such as:
-
downsizer contributions (if an eligible dwelling is sold later this financial year and the 90-days after settlement window overlaps into next financial year), or
-
small business CGT cap contributions.
More information
To find out more about ways to boost retirement savings, check out our Seven ways to maximise NCCs article. This article also contains flowcharts to help you determine eligibility to make NCCs in 2024/25 and 2025/26.
For more information on NCC eligibility rules and conditions, see our:You can also share the following guides with your clients to help them find important super information on myGov:
| |
