What’s New for the 2026 Financial Year

On 1 July 2025, a new round of tax reforms has reshaped the compliance landscape for employers, investors and family groups alike. Below are the key changes that took effect on 1 July 2025:

1.      Superannuation Guarantee reaches 12 %

After five years of half-percentage lifts, the compulsory Superannuation Guarantee (SG) rate rises from 11.5 % to 12 % for all salary and wages paid on or after 1 July 2025. Make sure your payroll software updates automatically and that any July pay runs processed in late June are still calculated at the higher rate.

2.      Transfer Balance Cap and Total Super Balance Cap increase

From 1 July 2025, both the general Transfer Balance Cap and the Total Superannuation Balance Cap will increase from $1.9 million to $2.0 million. This change may create new opportunities for eligible individuals to make non-concessional contributions or commence retirement phase income streams. It is important to review member balances and contribution strategies ahead of the new financial year.

3.      ATO interest no longer deductible

From 1 July 2025, interest the ATO charges on late payments or amended assessments (General Interest Charge and Shortfall Interest Charge) loses its long-standing tax-deductible status. Businesses carrying tax debt will now bear the full after-tax cost, which currently compounds at more than 11 % a year.

4.      New 30 % tax on super balances above $3 million (pending)

Legislation before Parliament proposes an additional 15 % tax on annual earnings that correspond to the portion of any superannuation balance exceeding $3 million, starting 1 July 2025. If enacted, only the slice above $3 million is affected; amounts below continue to be taxed at 15 % in accumulation or 0 % in pension phase. High-balance members should begin modelling cash-flow and asset-mix implications as soon as the tax is enacted.

5.      Paid Parental Leave will attract super

Children born or adopted from 1 July 2025 will trigger a lump-sum super contribution equal to 12 % of government-funded Parental Leave Pay. The ATO will pay the first contributions after the end of FY 2026, but parents should confirm their super fund details with Services Australia during any PPL claim.

6.      Instant asset write-off: back to $1,000 unless Parliament acts

Under current law, the small-business instant asset write-off limit reverts from $20,000 to $1,000 for assets first used or installed after 30 June 2025. The Government has pledged to extend the $20,000 threshold to 30 June 2026, but enabling legislation has not yet passed. Businesses planning equipment purchases should watch for updates in the first sitting weeks of the new financial year.

7.      Personal income-tax scales: second year of the Stage 3 redesign

The cost-of-living tax cuts that began on 1 July 2024 are now embedded. For FY 2026 the first two marginal rates remain 0 %, then 16 % up to $45,000 and 30 % up to $135,000. Employees will notice the full-year effect in 2026 tax returns and PAYG calculations.

8.      Minimum wage and Paid Parental Leave increases

• The national minimum wage rises 3.5 % to $948 per week from 1 July 2025.

• Paid Parental Leave itself extends to 24 weeks this year, on its way to 26 weeks by 2026, further affecting payroll planning alongside the new super obligation.

Looking ahead: Payday Super is next

One year from now, from 1 July 2026, employers must start paying super at the same time as salary and wages. Use FY 2026 to upgrade payroll cycles and cash-flow forecasting so you can meet the tighter timeline without stress.

Final word

Need help adapting to the changes? We can assist so you are prepared for this financial year and beyond.

If you would like an action plan, forecast or simply a second opinion on how the changes affect your business or family group, our team is ready to help.