Every new financial year brings possibility for changes to tax, superannuation and financial legislation. While many Australians hear about these updates through the media, understanding how they affect your own financial plan is another matter entirely.
This year introduces several significant changes, particularly for those approaching retirement, business owners, high-income earners and property investors.
At Yield, we’ve been preparing for many of these changes well before they came into effect on 1 July 2026. Over recent months, we’ve been reviewing strategies with clients, updating retirement projections, reassessing contribution opportunities and considering how the new rules may influence long-term investment decisions.
Whether you’re building wealth, approaching retirement or already retired, these changes present both opportunities and considerations. Here’s what has changed and why it matters.
1. Personal Income Tax Cuts
From 1 July 2026, the tax rate on income between $18,201 and $45,000 has reduced from 16% to 15%, giving Australians a little more money in their pocket. Depending on your income, this change could save you up to $268 per year in income tax. This is the first stage of the Government’s legislated tax cuts, with the tax rate for this income bracket set to reduce again to 14% from 1 July 2027.
While the annual tax saving is relatively modest, it reaches the widest group of people possible, being the first tax threshold.
2. Super Contribution Caps Have Increased
Several important superannuation limits have increased this financial year.
The concessional contribution cap has increased to $32,500 per year. These contributions are generally taxed at 15% within your super fund, making them a tax-effective way to save for retirement. If you haven’t used your full concessional contribution cap in previous years, you may also be able to make additional contributions using the carry-forward concessional contribution rules, provided you’re eligible.
The non-concessional contribution cap has increased to $130,000 per year. These are personal contributions made from your after-tax income and aren’t taxed when they enter your super fund. If you’re eligible, you may also be able to bring forward up to three years’ worth of non-concessional contributions, allowing you to contribute up to $390,000 in one financial year.
To learn more about contribution caps read our latest blog: Super Contribution Cap Changes From 1 July 2026.
3. Transfer Balance Cap Increases
From 1 July 2026, the Transfer Balance Cap (TBC) has increased from $2 million to $2.1 million.
The increase won’t apply the same way to everyone. It depends on when you started your retirement-phase pension and how much of your TBC you’ve already used.
1. You’re starting your first retirement-phase pension on or after 1 July 2026
If you’re commencing your retirement-phase pension for the first time from 1 July 2026, you’ll have access to the full $2.1 million.
2. You’ve already used your full TBC
If you’ve previously started a retirement-phase pension and used your full TBC at that time, you generally won’t receive any benefit from the increase. Your personal cap remains based on the limit that applied when you used it.
3. You’ve only partially used your TBC
If you’ve already started a retirement-phase pension but haven’t used your entire TBC, you may still benefit from the increase. The ATO works this out using its indexation method, so the amount of the increase will depend on how much of your cap you’ve already used. Generally, the less you’ve used, the larger your increase will be.
If you’re unsure how your TBC applies to you, or how much of your super you can transfer into the tax-free retirement phase, speaking with a financial adviser can provide clarity and help you make informed decisions as you approach retirement.
4. Division 296 Is Now in Effect
One of the most significant changes this financial year is the commencement of Div 296 tax, introducing an additional 15% tax on a portion of earnings attributable to superannuation balances exceeding $3 million.
Here’s how it works:
- Super balances up to $3 million: No change. Earnings continue to be taxed at up to 15% within the super fund.
- super balance between $3 million and $10 million: An additional 15% personal tax may apply on the relevant earnings, increasing the effective tax rate to up to 30%.
- super balance above $10 million: An additional 25% personal tax may apply on the relevant earnings, resulting in an effective tax rate of up to 40%.
While the new tax only affects a relatively small number of Australians today, it introduces broader planning considerations. Depending on your circumstances, it may affect your investment strategy, estate planning, capital gains tax (CGT) outcomes and how you structure your long-term wealth.
Division 296 is a complex area, and this is just a high-level overview. We have worked closely with our clients impacted in the lead up to 30th June 2026 and it has clearly highlighted that there is no one size fits all solution. For a detailed explanation of how the new rules work and what they could mean for your financial strategy, read our latest blog: Division 296 Tax Is Now Confirmed and Commencing from 1 July 2026.
5. Payday Super Begins
From 1 July 2026, your employer is generally required to pay your Super Guarantee (SG) contributions to your super fund within seven business days of each pay day, rather than making quarterly payments.
It’s important to note that the SG rate remains unchanged at 12%. The amount your employer contributes hasn’t increased, only the timing of when those contributions must be paid.
For employees, this means your super is invested sooner rather than sitting unpaid until the end of the quarter, giving your retirement savings more time to grow.
For business owners, it’s worth reviewing how this change fits into your broader business and financial strategy. More frequent super payments may affect cash flow and require updates to your payroll systems and processes to ensure ongoing compliance.
6. $1,000 Standard Tax Deduction
From the 2026–27 financial year, eligible taxpayers will have the option to claim a standard $1,000 deduction for work-related expenses without needing to keep receipts or records.
This measure is designed to simplify the tax return process for those with relatively low work-related expenses. However, if your eligible work-related expenses exceed $1,000, you can still choose to claim your actual expenses, provided you have the appropriate records to support your claim.
If you’re unsure which option is likely to provide the greater tax benefit, it’s worth seeking professional advice before lodging your tax return. Choosing the right approach could help you maximise your deduction while ensuring you remain compliant with ATO requirements.
7. Medicare Levy Surcharge Changes
From 1 July 2026, the income thresholds for the Medicare Levy Surcharge (MLS) have increased.
If you don’t have eligible private hospital cover, you can now earn more before the surcharge applies. The threshold has increased to $105,000 for singles and $210,000 for families, meaning some Australians may avoid paying the additional tax if their income falls below the new limits.
8. Paid Parental Leave Increases
From 1 July 2026, the Government’s Paid Parental Leave scheme has been expanded, with eligible families now able to access up to 26 weeks (130 days) of paid leave, up from 24 weeks (120 days).
The amount of leave reserved for each partner has also increased from 15 days to 20 days, providing families with greater flexibility when sharing parental leave.
For families welcoming a new child, the additional leave may provide greater financial support and flexibility during the first year of parenthood. If you’re planning to grow your family, it’s worth understanding how these changes may fit into your broader financial plan, including your cash flow, savings and return-to-work strategy.
9. Small Business Instant Asset Write-Off
Eligible businesses with an annual turnover of less than $10 million can immediately deduct the business portion of assets costing up to $20,000. The write-off can be claimed for multiple eligible assets, provided they are first used or installed ready for use during the financial year.
For business owners planning to purchase new equipment or upgrade existing assets, this measure may reduce taxable income while improving cash flow in the year the purchase is made.
10. The Loss Carry Back Tax Offset
From 1 July 2026, eligible companies with an annual turnover of less than $1 billion can access the Loss Carry Back Tax Offset.
This allows eligible businesses to offset current-year tax losses against tax paid in the previous two financial years, potentially resulting in a tax refund rather than waiting to use those losses against future profits.
For businesses experiencing fluctuating profits or investing for future growth, this change may improve cash flow and provide greater flexibility when managing business finances.
It’s important to note that specific eligibility criteria apply, and not every business will qualify for the offset. If you’re a business owner, it’s worth speaking with your accountant or financial adviser to understand whether your business is eligible and how this measure could form part of your broader tax planning strategy.
11. Age Pension Threshold Increases
From 1 July 2026, the Age Pension income and assets test thresholds have increased, meaning some retirees can now earn more or hold more assets before their pension entitlement is affected.
If you’re approaching retirement or already receiving the Age Pension, this could be good news. Depending on your circumstances, you could qualify for a higher Age Pension or become eligible for payments you weren’t previously entitled to.
With these higher thresholds now in place, it’s a good time to review your retirement strategy and ensure you’re making the most of your Age Pension entitlements.
To learn more about the updated Age Pension income and assets test limits, read our blog: Age Pension Changes: Key Updates Explained
Start Planning for the Year Ahead
The start of a new financial year brings more than just legislative changes; it creates new opportunities to review your financial strategy.
While some of these updates may have only a small impact on their own, together they can influence your tax position, retirement savings, investment strategy and long-term financial outcomes.
At Yield, we’ve already been reviewing these changes with our clients and incorporating them into their financial plans where appropriate. If you’re unsure how any of these changes apply to your circumstances, now is a great time to review your strategy and ensure you’re making the most of the opportunities available.
Start with a no-obligation consultation. We’ll begin with a quick conversation to understand your goals, answer any questions you have and determine whether we’re the right fit for you. If we are, we’ll connect you with the adviser best suited to your needs for a no-obligation consultation. If we’re not, we’ll happily point you in the direction of the right professional.
There’s no pressure and no obligation. It’s simply an opportunity to explore what’s possible, understand your options and decide what the right next step looks like for you.
