Superannuation remains one of the most tax-effective wealth-building structures available to Australians. With contribution caps increasing from 1 July 2026, there’s a genuine opportunity to boost retirement savings, reduce tax, and make faster progress toward the future you’re designing for yourself and your family. Understanding the concessional cap, non-concessional cap, carry-forward and bring-forward rules, and minimum pension requirements is the first step to making the most of what’s available this financial year.
Why Superannuation Is So Tax Effective
- Concessional contributions are generally taxed at only 15% within the super fund.
- Investment earnings within super are generally taxed at a maximum of 15%.
- Capital gains on assets held for more than 12 months may be taxed at an effective rate of around 10%.
- Once retirement phase commences, earnings supporting an account-based pension may be tax-free.
Note: from 1 July 2026, higher income earners (those with income above $250,000) may pay an additional 15% tax on concessional contributions under Division 293, so the tax saving below is smaller for some clients — a conversation worth having with your adviser.
The Benefit of Concessional Contributions
Consider someone earning $120,000 per annum with a marginal tax rate of approximately 32%, including the Medicare levy.
If they receive an additional $10,000 as salary:
- Approximately $3,200 may be lost to tax.
- Around $6,800 remains after tax.
If instead the $10,000 is contributed to super as a concessional contribution:
- Contributions tax is generally only 15%.
- Approximately $8,500 remains invested within super.
This creates an immediate tax saving of approximately $1,700, while simultaneously increasing retirement savings. For higher-income earners (subject to Division 293 above), the saving may be smaller, but the compounding benefit over time can still be significant.
2026–27 Concessional Contribution Cap
From 1 July 2026, the concessional contribution cap increases to $32,500 per person, per financial year — up from $30,000. This includes employer Super Guarantee contributions, salary sacrifice, and personal deductible contributions, so it’s worth checking your total against the new cap rather than assuming last year’s settings still fit.
Carry-Forward Concessional Contributions
The carry-forward rules allow eligible individuals to use unused concessional cap amounts from prior years, on top of the current year’s cap. This can be particularly valuable when:
- Selling an investment property
- Receiving a bonus
- Receiving an inheritance
- Earning unusually high taxable income in a given year
- Preparing for retirement
Eligibility requirements:
- Total super balance must be below $500,000 on 30 June of the previous financial year.
- Unused concessional cap amounts can generally be carried forward for up to five financial years, after which they expire.
Example: Sarah has a total super balance of $400,000 and $45,000 of unused concessional cap available from prior years. In 2026–27 she could potentially contribute her current year cap of $32,500 plus the $45,000 carried forward — a total concessional contribution of $77,500. This may generate a substantial tax deduction while significantly boosting her super balance.
Non-Concessional Contribution Cap
Non-concessional contributions are made from money that has already been taxed, and are generally not taxed again when contributed to super. From 1 July 2026, the annual non-concessional contribution cap increases to $130,000 per person, per financial year.
Eligibility to make non-concessional contributions at all depends on your Total Super Balance (TSB) as at 30 June 2026, measured against the general transfer balance cap, which also increases — to $2.1 million from 1 July 2026. If your TSB is at or above $2.1 million, your non-concessional cap is nil for the year.
Bring-Forward Non-Concessional Contributions
The bring-forward rules allow eligible individuals under 75 to bring forward up to three years’ worth of non-concessional cap and contribute it in a single year. This is particularly useful following:
- Sale of a family home
- Receipt of an inheritance
- Sale of investments or a business
- Accumulation of significant cash reserves outside super
The maximum you can bring forward depends on your Total Super Balance at 30 June 2026:
Total Super Balance at 30 June 2026 | Bring-Forward Period | Maximum NCC Over the Period |
Below $1.84 million | 3 years | $390,000 |
$1.84 million – below $1.97 million | 2 years | $260,000 |
$1.97 million – below $2.1 million | No bring-forward (standard cap only) | $130,000 (current year only) |
$2.1 million or more | Not eligible | $0 |
Important: if you’ve already triggered a bring-forward arrangement in 2024–25 or 2025–26, you won’t benefit from these higher 2026–27 caps until your existing bring-forward period ends. For retirees and pre-retirees holding significant assets outside super, timing this correctly can meaningfully change the outcome — it’s worth reviewing before making a large contribution.
Minimum Pension Requirements
Once an account-based pension has commenced, a minimum amount must generally be withdrawn each financial year to retain the pension’s tax-exempt earnings status. Failure to meet the minimum can result in the pension losing its tax-free treatment for that year. The minimum drawdown rates for 2026–27 are the standard rates (no COVID-era reduction currently applies):
Age | Minimum Drawdown Rate |
Under 65 | 4% |
65 – 74 | 5% |
75 – 79 | 6% |
80 – 84 | 7% |
85 – 89 | 9% |
90 – 94 | 11% |
95+ | 14% |
If you’re turning an age that moves you into a new drawdown bracket around 1 July 2026 — for example, turning 65 or 75 — your required minimum withdrawal will increase accordingly. It’s worth checking this early rather than finding out partway through the year.
Why Building Super Early Matters
Many people focus on investment returns alone, but one of the biggest drivers of retirement wealth is time. Starting early — and contributing consistently — allows you to benefit from compound investment growth, concessional tax treatment, ongoing employer contributions, and decades of reinvested earnings. The combination of lower tax rates and compounding can make a substantial difference to your long-term financial security.
Key Takeaways for 2026–27
- Concessional contribution cap increases to $32,500.
- Non-concessional contribution cap increases to $130,000.
- The general transfer balance cap rises to $2.1 million, affecting who can make non-concessional contributions.
- Individuals with a total super balance below $500,000 may be able to use carry-forward concessional contributions.
- Eligible individuals may contribute up to $390,000 under bring-forward, depending on their total super balance.
- Higher income earners should be aware of Division 293 tax on concessional contributions.
- Minimum pension payments remain a key requirement for retirees — check your bracket if your age is changing this year.
Design Your Future, Live Your Way
Superannuation isn’t just a retirement account — it’s one of the most powerful tools you have to build the future you actually want, for yourself and the people you care about. The changes taking effect this year create real opportunities, but the right strategy depends on your personal circumstances, your total super balance, and your goals.
If you’d like to understand what these changes mean for your situation, our team at Heard Financial is here to help. Get in touch to arrange your free, no-obligation appointment with one of our Financial Advisers.
General advice disclaimer
The information in this article is general in nature and has been prepared without taking into account your personal objectives, financial situation or needs. Before acting on any information, you should consider whether it is appropriate for your circumstances and seek personal advice from a qualified financial adviser.