As part of ongoing reforms to strengthen Australia’s retirement system, several key superannuation changes will come into effect on 1 July 2025. Announced by the Australian Government and administered through the Australian Taxation Office (ATO) and the Australian Prudential Regulation Authority (APRA), these updates will impact employers, employees, and high-balance super fund members alike. Understanding these changes will help your business stay compliant and support your workforce through a smooth transition.
What’s changing on 1 July 2025?
The Superannuation Guarantee (SG) rate will rise from 11.5% to 12%. This rate must apply to all ordinary time earnings paid on or after 1 July 2025, regardless of when the work was performed. This is the final legislated step in the government’s plan to gradually raise the SG rate to help Australians grow their retirement savings. The general transfer balance cap will also increase from $1.9 million to $2 million. The general transfer balance cap is a limit on the total amount of superannuation that can be transferred into the retirement phase.
The government is considering a new tax that will affect people with total superannuation savings over $3 million. Currently, earnings in super funds are taxed at 15%, and earnings in super pensions are not taxed at all. The proposal would add an extra 15% tax on earnings for the portion of super exceeding $3 million. This change will only impact individuals with total super savings over $3 million. If you have less than this amount in super, these proposed changes won’t affect you at all.
The government previously tried to pass this legislation but wasn’t successful. For this proposal to become law, it needs to pass through Parliament, which won’t meet again until 22 July. This means we won’t know the final details of this proposal for some time. If your super balance is over $3 million, you’re in a bit of a waiting game. The government could potentially backdate the start of this new tax to 1 July 2025, which creates some uncertainty for planning purposes. Your adviser can keep you posted on these developments.
How businesses can prepare
With July fast approaching, here’s how businesses can prepare: Update Payroll Systems, ensure systems are ready to calculate and process super contributions at the new 12% rate. Bring your internal teams up to speed. This will help reduce errors and ensure confident communication with employees. A quick internal memo or training session can go a long way. Keep employees in the loop. Let your team know what the SG increase means for them. If you have high-income earners who may be affected by the new tax on balances over $3 million, encourage them to seek financial advice. This can also be a good opportunity to talk more broadly about super and long-term financial wellbeing.
Plan for increased costs
The SG increase will raise your payroll expenses slightly. Review your budgets and forecasts now so you can absorb the change smoothly. For some businesses, this might also be the right time to review your overall remuneration strategy.
