On Tuesday, 25 March 2025, Treasurer Jim Chalmers handed down the 2025-26 Federal Budget, his 4th Budget. It was a non-eventful budget for superannuation. The only super item of note was some additional funding to extend an ATO Tax Integrity Program which is expected to raise an extra $31m in unpaid superannuation from medium and large businesses and wealthy groups over 5 years from 2024-25.
Proposed Div 296 regime – uncertainty remains
While no new major super measures were announced in the Budget, the super industry has enough on its plate at the moment in terms of navigating the uncertainty surrounding the proposed Div 296 regime for superannuation account balances above $3m from 1 July 2025. Under proposed Div 296 of the ITAA 1997, individuals with an adjusted total superannuation balance over $3m at 30 June each year will be subject to an additional 15% tax on a percentage of earnings equal to the percentage of superannuation balances that exceeds $3m (not indexed) for an income year. The Div 296 tax will apply from 2025-26 and will be in addition to any tax their super funds pay on earnings in accumulation. As a result, earnings attributable to balances above $3m will generally attract a combined headline rate of 30%. Proposed Div 296 of the ITAA 1997 contains legislation that has not yet been passed by Parliament. This legislation will lapse once the Prime Minister calls the Federal election, unless the Bills are passed beforehand. Therefore, the status of the proposed Div 296 regime may be subject to the outcome of the May election, if not passed before the calling of the election. If the ALP is returned to Government at the May election, it is likely that the Bills would be re-introduced, although the proposed 1 July 2025 start date may be delayed.
Super Guarantee: no change to legislated rate rise to 12% for 2025-26
The Budget did not announce any change to the timing of the next (and final) Super Guarantee (SG) rate increase. The SG rate is currently legislated to increase from 11.5% to 12% on 1 July 2025. It has been gradually increasing by 0.5% each year since it was 9.5% in 2020-21. The 12% rate from 1 July 2025 marks its final destination rate.
SG for high-income earners
The increase in the SG rate to 12% from 1 July 2025 also means that the SG opt-out income threshold will decrease to $250,000 from 1 July 2025 (down from $260,870). High-income earners with multiple employers can opt-out of receiving SG from an employer to avoid unintentionally breaching the concessional contributions cap ($30,000 for 2024-25 and 2025-26).
Payday Super
Payday Super reforms have been previously announced to commence from 1 July 2026. The reforms will amend the superannuation guarantee (SG) legislation to align the payment of SG contributions with the day on which an employee is paid (rather than the current quarterly minimum payment schedule). The Government released draft legislation for these reforms on 14 March 2025, but no further changes were announced in this Federal Budget.
For an in depth analysis of the budget please download our budget paper: Budget 2025-26 – Bramelle Partners Pty Ltd.
