Weekly earnings data released this week has triggered indexation of the superannuation contribution caps, meaning the concessional contribution cap is expected to rise from $30,000 to $32,500 from 1 July.

While the Australian Taxation Office still needs to formally confirm the increase, the rise was anticipated based on Average Weekly Ordinary Time Earnings data released by the Australian Bureau of Statistics.

This change creates meaningful planning opportunities for the 2025–26 and 2026–27 financial years.

Concessional Contributions – Higher Deduction Capacity

Concessional contributions are pre-tax contributions, including:

• Superannuation Guarantee (currently 11.5%, moving to 12%)
• Salary sacrifice contributions
• Personal deductible contributions

From 1 July, the annual cap increases to $32,500.

For individuals using a contribution reserving strategy within an SMSF, this means the total potential deductible contribution across two financial years increases from $60,000 to $62,500.

The Double Contribution Strategy (SMSFs Only)

SMSF members can potentially bring forward next year’s concessional cap into the current financial year for deduction purposes.

This is done by:

• Making one contribution (e.g. $30,000) in June and allocating it this financial year
• Making a second contribution (e.g. $32,500) in June but resolving to allocate it in July

The tax deduction is claimed in the year the contribution is made, but the second contribution is counted against the following year’s cap.

To comply:
• The trustee must formally resolve to defer allocation
• A Request to Adjust Concessional Contributions form must be lodged with the ATO
• Proper timing and documentation is critical

Used correctly, this strategy increases deductible capacity and can materially reduce taxable income in a high-income year.

Catch-Up Concessional Contributions

If your total super balance was under $500,000 at 30 June 2025, you may also use unused concessional cap amounts from the past five years.

Indexation of the cap does not affect prior unused amounts, but combining catch-up contributions with contribution reserving can create very large deductible opportunities.

In some cases, total deductible contributions may exceed $150,000 or even approach $200,000 depending on unused caps.

This is particularly relevant for:
• Individuals selling an investment property
• Business owners crystallising capital gains
• Expats returning to Australia
• Retirees under 67 with a one-off taxable event

Non-Concessional Contributions Are Also Rising

The non-concessional (after-tax) contribution cap increases from $120,000 to $130,000 from 1 July.

This cap is linked to the concessional cap.

Eligibility depends on your Total Super Balance, which is linked to the Transfer Balance Cap.

The Transfer Balance Cap increases to $2.1 million from 1 July 2026.

From 1 July 2026:
• If your Total Super Balance is below $2.1 million, you may contribute up to $130,000 per year after tax.

Bring-Forward Rule

If eligible, you may bring forward up to three years of non-concessional caps.

From 1 July:

• If Total Super Balance < $1.84 million → contribute up to $390,000
• If between $1.84m and $1.97m → contribute up to $260,000
• If between $1.97m and $2.1m → contribute up to $130,000
• If above $2.1m → no non-concessional contributions permitted

Importantly, if you have already triggered a bring-forward period, you do not benefit from the cap increase until that three-year period ends.

Example:
• If you triggered a $360,000 bring-forward in 2024–25, you remain capped at $360,000 until the period expires.
• You do not receive the uplift until the next cycle.

Timing is critical.

Age and Work Test Considerations

Eligibility matters.

For concessional personal deductible contributions:

• Under age 67 → no work test
• Age 67 to 74 → must meet 40 hours of gainful employment in 30 consecutive days
• Work test exemption may apply if Total Super Balance < $300,000 and you meet criteria
• Voluntary contributions must be received within 28 days after the end of the month you turn 75

Non-concessional contributions do not require a work test, only a Total Super Balance test.

Why This Matters

Indexation increases may appear modest, but over time they create:

• Larger tax-deductible opportunities
• Greater capacity to move capital into the concessional super environment
• Increased ability to manage capital gains events
• Enhanced flexibility for retirement planning

For high-income earners, business owners, or those approaching retirement, these cap increases can materially affect strategy over the next 12–24 months.

The key is coordination across tax planning, SMSF administration, contribution timing and cash flow management.