What the New Financial Year Brings: Key Changes from 1 July 2025 and How They Might Affect You
The start of a new financial year is the perfect time to assess the policy changes that could affect your finances—especially if you're retired or nearing retirement. While tax planning may not spark joy, taking a proactive approach now could save you time, money, and stress come 30 June 2026.
From superannuation updates to delayed aged care reforms, here’s what you need to know—and where you might need to act.
Super Guarantee Rises to 12%: What It Means for You
From 1 July 2025, the Superannuation Guarantee (SG) rate will increase from 11.5% to 12%. This is great news for employees, as it means more money going into your super each year.
However, if your salary is quoted as a "total package" (e.g. $85,000 including super), your take-home pay might shrink slightly to accommodate the higher employer contribution. If your salary is expressed as "plus super", the increase won’t affect your cash flow—your employer simply pays the extra 0.5% into your super fund.
Clarify how your salary is structured. If you're salary sacrificing to super, ensure the additional 0.5% doesn’t tip you over your concessional contributions cap of $30,000.
Transfer Balance Cap Increases to $2 Million
The Transfer Balance Cap (TBC) determines how much of your super you can move into the tax-free pension phase. From 1 July 2025, this cap will rise from $1.9 million to $2 million.
This is especially beneficial for those about to commence a retirement income stream. But keep in mind—the TBC is a lifetime cap. If you’ve already used your full entitlement under a previous limit, you won’t automatically gain access to the new threshold.
If you're planning to start a pension soon, this change may allow you to move more funds into the tax-free zone. Speak to a financial adviser if you’ve previously started a pension and want to know how much of your cap is still available.
Super Contribution Caps Stay the Same, But Balance Rules Still Matter
Concessional (before-tax) and non-concessional (after-tax) contribution caps remain at $30,000 and $120,000 respectively. However, your Total Superannuation Balance (TSB) on 30 June 2025 will influence what strategies are available to you:
If your TSB exceeds $500,000, you won’t be eligible for catch-up concessional contributions.
If your TSB exceeds $2 million, you won’t be able to make any non-concessional contributions at all.
Your 30 June 2025 balance will be a key marker. If you’re near a threshold, this may be your last year to contribute strategically. Consider whether it’s worth drawing down or restructuring your super to stay under these limits.
Pension Minimums Based on Age at 30 June
If you’re receiving a pension from your super, you must withdraw a minimum amount each year, calculated as a percentage of your balance on 30 June and based on your age.
For example, someone aged 65 at 30 June 2025 with $1 million in pension phase will need to withdraw at least 5% or $50,000 for the 2025–26 year. If your birthday falls on 1 July, you’re still considered 64 on 30 June, and your minimum remains at 4%.
Know your age and balance on 30 June. Plan your cash flow accordingly, especially if you manage a self-managed super fund (SMSF), which needs liquidity to meet pension payments.
Aged Care Reforms Delayed—but Still Expected
Major reforms to residential aged care were due to begin from 1 July 2025. These have now been delayed—potentially until later in the year. While details are still pending, the changes aim to revamp pricing, funding, and the means testing process.
If you or a loved one may enter aged care soon, remain alert to policy updates. These reforms could impact affordability, eligibility, and your estate planning options.
Other Notable Updates
Medicare Levy Thresholds are set to rise, likely reducing liability for lower-income earners. These increases are expected to apply from 1 July 2024, but legislation is pending.
HELP/HECS Repayment Threshold is due to rise from $54,000 to $67,000, potentially easing pressure for younger earners.
Division 296 Tax: A new 15% tax on earnings from super balances above $3 million is expected to start from 1 July 2025. While it won’t affect most people, high-balance SMSF members should prepare for detailed reporting and possible tax implications.
Final Thoughts: Strategy Over Speculation
This year’s changes highlight the importance of financial strategy. Retirement planning isn’t just about investment returns—it’s also about using the rules to your advantage.
Whether it’s managing your contributions, timing your pension start, or navigating aged care, thoughtful planning can lead to significant long-term benefits. If you’re unsure how these changes affect you, now is a good time to consult a licensed financial adviser.
Sometimes, the best financial move isn’t an investment—it’s a plan.
Disclaimer: The information in this article is general and not tailored to your specific circumstances. It does not constitute personal financial advice. Please consult a licensed professional before making financial decisions. Some updates (e.g. Medicare levy thresholds and aged care reforms) are subject to legislation yet to be passed. Always refer to the latest official sources or seek advice before acting.