Thinking about setting up a Self-Managed Super Fund (SMSF)? An SMSF can give you greater control over how your retirement savings are invested, but it also comes with significant responsibilities.

Unlike an APRA-regulated super fund, where a professional trustee is responsible for managing the fund, an SMSF puts those responsibilities largely in the hands of its trustees. That means choosing an SMSF is not simply about investment choice. You need to consider the costs, administration, investment strategy, compliance requirements and whether managing your own super is appropriate for your circumstances.

What Is an SMSF?

A Self-Managed Super Fund is a private superannuation fund established for a small number of members. The members are generally also trustees, or directors of a corporate trustee.

• The key difference is control. SMSF trustees are responsible for making investment decisions and ensuring the fund complies with superannuation and tax laws.
• The ATO requires an SMSF to have an investment strategy before it starts investing. The strategy must reflect the purpose and circumstances of the fund and its members and must be reviewed regularly.
• This makes an SMSF quite different from simply selecting an investment option within an existing super fund.

Is an SMSF Right for You?

Before establishing an SMSF, consider why you want one. An SMSF may appeal to people who want greater control over their investments, have more complex investment needs or want to manage a broader range of assets within the superannuation rules. However, control also means responsibility.

As an SMSF trustee, you are responsible for ensuring investments comply with the law, maintaining records, preparing reports, arranging an annual audit and ensuring the fund’s investment strategy remains appropriate. The ATO makes it clear that trustees remain responsible for the fund’s investments even when professional advisers are used.

1. Look at the Investment Options

One of the main reasons people consider an SMSF is investment flexibility. Depending on the fund’s investment strategy and the superannuation rules, an SMSF can invest in assets such as shares, managed investments, term deposits and property. But greater choice does not mean every investment is permitted.

The ATO states that SMSF investments must be permitted under the fund’s trust deed and superannuation law, have clear legal ownership, be made on a commercial arm’s-length basis and satisfy the sole purpose test. There are also restrictions around transactions involving members and related parties. For example, the ATO states that, subject to limited exceptions, an SMSF generally cannot acquire assets from members or related parties, provide financial assistance to members or related parties, or use fund assets to provide a present-day benefit. Before investing, make sure you understand both the opportunity and the restrictions.

2. Have a Clear SMSF Investment Strategy

The ATO says an SMSF investment strategy should consider matters including:

• Diversification
• Investment risk and likely returns
• Liquidity
• The fund’s ability to meet expenses and retirement benefits
• The circumstances and needs of members
• Members’ retirement timeframes and risk appetite

Your investment strategy should be in writing and reviewed regularly. This is important because an SMSF should not be established simply to buy a particular asset. The investment strategy needs to explain how the fund’s investments relate to the retirement objectives of its members. This is important because where an SMSF is established with a particular investment in mind, trustees still need to consider whether that investment is appropriate having regard to the fund’s overall investment strategy and the circumstances of its members.

3. Compare SMSF Costs

Running an SMSF involves ongoing costs.

These can include:

• Establishment costs
• Accounting and tax return preparation
• Annual audit fees
• ATO supervisory levy
• Administration costs
• Investment advice
• Legal costs
• Brokerage and investment expenses
• Insurance where appropriate

The important question is not simply how much an SMSF costs each year. It is whether the benefits, flexibility and control justify those costs for your circumstances. For some people, the costs and administration of an SMSF may outweigh the benefits. For others, particularly those with more complex investment requirements, the additional control may be an important consideration.

4. Consider Your Investment Performance

Investment performance should be considered carefully, but it should not be the only reason for choosing an SMSF. Past performance does not guarantee future returns. If you are comparing an existing APRA-regulated super product with the potential benefits of an SMSF, make sure you are comparing like with like. Consider:

• Investment returns
• Investment risk
• Fees and expenses
• Diversification
• Liquidity
• Asset allocation
• Your investment timeframe

APRA conducts an annual performance test for certain APRA-regulated superannuation products. The test is designed to improve transparency and hold trustees accountable for underperformance. APRA also publishes broader product performance information covering investment returns, fees and performance-test outcomes. These resources can provide useful information when comparing an existing super fund with other APRA-regulated options.

5. Don’t Forget Insurance

Insurance is another issue to consider when deciding whether to establish an SMSF. Some super funds provide members with insurance options such as:

• Life insurance
• Total and permanent disability cover
• Income protection

If you move from an existing fund to an SMSF, you should check what insurance arrangements you currently have and whether transferring or replacing that cover could affect you. Insurance should be considered separately from the investment decision because losing existing cover can have important consequences.

6. Understand the SMSF Trustee Responsibilities

Perhaps the biggest difference between an SMSF and an APRA-regulated super fund is the level of responsibility placed on the trustee. SMSF trustees need to ensure the fund:

• Complies with superannuation legislation
• Maintains appropriate records
• Has and follows an investment strategy
• Meets tax and reporting obligations
• Arranges an annual independent audit
• Makes investments on an arm’s-length basis
• Complies with contribution and payment rules

The ATO also warns SMSF trustees about investment schemes that promise unusually high returns.Trustees need to understand what they are investing in and ensure every investment decision is consistent with the fund’s purpose and legal requirements.

7. Think About Property and Other Complex Investments

The Australian Taxation Office (ATO) has strict rules governing when a self-managed super fund (SMSF) can invest in property. Generally, the property must be acquired for the sole purpose of providing retirement benefits to fund members, rather than for personal use or benefit. An SMSF generally cannot acquire residential property from a member or related party, and residential property owned by the SMSF cannot be used by members or their relatives.

Different rules can apply to eligible business real property, including commercial property used in a business. Any property investment must also be consistent with the fund’s investment strategy and comply with the relevant superannuation rules. Recent changes have also affected the ability of SMSFs to borrow to purchase residential property.

From 10 August 2026, SMSFs are generally no longer able to enter into new limited recourse borrowing arrangements (LRBAs) to acquire residential property. Existing arrangements entered into before the change may be protected under transitional rules.

Importantly, the restriction does not extend to eligible commercial property, so SMSFs may still be able to use an LRBA to acquire business or commercial property where the relevant superannuation and borrowing rules are satisfied.

For anyone considering establishing an SMSF specifically to purchase property, it is important to understand these rules before setting up the fund or entering into a purchase contract. Professional advice should be obtained to ensure the proposed investment and funding arrangement comply with the relevant superannuation and tax requirements.

8. SMSF or APRA-Regulated Super Fund?

The decision does not have to be based simply on investment choice. An APRA-regulated super fund generally provides professional trustee oversight, investment options and administration without requiring the member to manage the fund’s compliance themselves. An SMSF provides greater direct control but places considerably more responsibility on the trustees. The right structure depends on your objectives, investment preferences, circumstances, costs and willingness to take on the responsibilities of being an SMSF trustee.

Final Thoughts

Choosing an SMSF is a significant financial decision. The attraction is usually greater control and flexibility, but those benefits come with additional administration, costs and legal responsibilities. Before establishing an SMSF, consider your investment objectives, the types of assets you want to invest in, the likely costs, insurance arrangements and the time and expertise required to manage the fund. The ATO provides detailed guidance on establishing and running an SMSF, including investment strategies and investment restrictions.

APRA also publishes performance information that can help consumers understand how APRA-regulated superannuation products are performing.An SMSF should be established because it is appropriate for your overall retirement strategy, rather than simply because it offers more investment choices.

FAQs About Choosing an SMSF

What is an SMSF?

A Self-Managed Super Fund is a private superannuation fund where the members generally act as trustees and are responsible for managing the fund and complying with superannuation laws.

How many members can an SMSF have?

An SMSF can have up to six members, subject to the relevant superannuation rules.

Do SMSFs need an investment strategy?

Yes.The ATO requires an SMSF to have an investment strategy and to review it regularly.

Can an SMSF invest in property?

Yes, an SMSF can invest in certain types of property, but strict superannuation rules apply.

The investment must be consistent with the fund’s investment strategy and satisfy the relevant legal requirements.

Are SMSFs regulated by APRA?

No. SMSFs are regulated by the Australian Taxation Office (ATO). APRA regulates most large superannuation entities, including APRA-regulated super funds.

What should I consider before setting up an SMSF?

Consider investment choice, costs, administration, insurance, compliance responsibilities, your investment strategy and whether you are comfortable taking responsibility for managing your own superannuation.

How Can We Help?

If you have any questions or would like further information, please contact Camden Professionals on:

Phone: 08 9221 5522
Email: info@camdenprofessionals.com.au

You can also arrange a meeting so we can discuss your requirements in more detail.

General Information Disclaimer

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any person. Any advice contained on this page and on this website is General Advice and does not consider any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals and/or Investax Group, its officers, representatives, employees, and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

For many Australians, superannuation has been one of the most effective long-term wealth-building structures due to its concessional tax treatment. However, from 1 July 2026, changes under Division 296 tax will reduce some of the tax advantages available to individuals with larger superannuation balances.

The introduction of Division 296 tax means individuals with superannuation balances above certain thresholds need to carefully consider how they structure their retirement savings, investments and future contributions. For the 2026–27 financial year, the first threshold is set at $3 million, with a second threshold applying at $10 million.

These thresholds will be indexed in future years.

What Is Division 296 Tax?

Division 296 is a new tax measure that applies an additional tax on earnings associated with superannuation balances above specified thresholds. The purpose of the measure is to reduce the tax concessions available to individuals with very large superannuation balances.

For the 2026–27 financial year:

• The first threshold is $3 million
• A second threshold applies at $10 million
• Thresholds will be indexed over time

The additional tax does not mean your entire superannuation balance is taxed at a higher rate once it exceeds the threshold.Instead, the tax applies only to the relevant proportion of earnings connected to the amount above the applicable threshold.

How Does Division 296 Tax Work?

Division 296 tax is calculated based on the proportion of your superannuation balance that exceeds the relevant threshold.It does not apply to your entire superannuation balance.For example, if your superannuation balance is slightly above $3 million, the additional tax applies only to the portion relating to the amount above the threshold.

The calculation considers:

• Your total superannuation balance
• The applicable threshold
• The earnings attributable to the excess amount

This means the impact can vary significantly between individuals depending on their balance, investment performance and circumstances.

Does Division 296 Tax Mean Super Is Taxed at 30%?

No. A common misunderstanding is that once your super balance exceeds $3 million, your entire superannuation balance will automatically be taxed at 30%.

This is not how Division 296 works. The additional tax applies only to the relevant proportion of earnings associated with the balance above the threshold. Your existing superannuation tax treatment continues to apply to the portion within the normal limits.

What Happens Above the $10 Million Threshold?

A higher threshold applies for individuals with very large superannuation balances.

For the 2026–27 financial year:

Superannuation Balance	Additional Division 296 Treatment
Up to $3 million	Existing superannuation tax treatment applies
Between $3 million and $10 million	Additional Division 296 tax may apply
Above $10 million	Higher additional tax treatment may apply

The purpose of the second threshold is to apply a higher level of taxation to extremely large superannuation balances.

How Are Earnings Calculated Under Division 296?

An important aspect of Division 296 is that the calculation is based on earnings determined under the legislation. The calculation considers changes in the value of superannuation interests and other relevant factors. For individuals with complex superannuation arrangements, including self-managed super funds (SMSFs), the calculation can become more complicated. Factors that may affect the outcome include:

• Investment income
• Capital gains
• Pension interests
• Changes in account balances
• Timing of contributions and withdrawals

Are Unrealised Gains Taxed Under Division 296?

The final Division 296 rules changed from earlier proposals. The calculation does not simply tax every unrealised increase in investment value. An increase in the value of an investment is not automatically taxed just because the market value has increased and the asset has not been sold. However, the calculation remains complex and depends on the specific circumstances of the individual.

Does Division 296 Mean Super Is No Longer Tax Effective?

No. Superannuation can still remain one of the most tax-effective investment structures available. Super continues to provide significant tax benefits, including:

• Concessional tax treatment in accumulation phase
• Potential tax-free earnings in eligible retirement-phase pensions

The introduction of Division 296 does not remove the benefits of superannuation. Instead, it changes the way individuals with very large balances need to think about future wealth accumulation.

Should You Stop Contributing to Super After Reaching $3 Million?

Not necessarily. Reaching the $3 million threshold does not automatically mean that superannuation is no longer suitable. The right strategy depends on factors such as:

• Your retirement goals
• Your investment strategy
• Your personal tax position
• Your access requirements
• Your estate planning objectives

For some individuals, continuing to use super may still provide significant advantages. For others, building wealth outside super may become an important consideration.

Superannuation vs Building Wealth Outside Super

As super balances grow, some individuals may consider whether future investments should remain inside super or be held through alternative structures.

Key considerations include:

Consideration	Superannuation	Outside Super
Tax treatment	Generally concessional	Depends on structure
Access	Restricted until conditions of release are met	Generally greater flexibility
Investment options	Subject to super rules	Wider range of structures available
Estate planning	Specific superannuation rules apply	Depends on ownership structure

The decision is not only about tax. Other factors, including access, flexibility and estate planning, should also be considered.

Could an Investment Company Be an Alternative?

For some individuals with significant wealth, an investment company may form part of a broader wealth strategy. An investment company may allow profits to remain within the company and be reinvested. This can be useful for individuals who:

• Are still accumulating wealth
• Do not require investment income personally each year
• Want greater control over investment capital

However, an investment company is not automatically better than super.

The structure has its own considerations, including:

• Corporate tax rates
• Administration costs
• Loss of some capital gains tax concessions
• Tax implications when extracting funds

Estate Planning Considerations

Division 296 discussions should not focus only on tax during your lifetime. Estate planning is also an important consideration for individuals with large superannuation balances. Superannuation does not automatically form part of your estate.

The outcome depends on:

• Beneficiary nominations
• Super fund rules
• Estate planning arrangements

Super Death Benefits Tax

The tax treatment of superannuation death benefits depends on who receives the benefit.

Generally:

• Payments to eligible dependants may receive concessional treatment.
• Payments to non-dependants, such as some adult children, may have different tax consequences.

For individuals with significant super balances, planning ahead can help manage potential tax outcomes for beneficiaries.

What Should High-Balance Super Members Do?

Individuals approaching or exceeding the $3 million threshold should review their overall wealth strategy. Important areas to consider include:

• Superannuation balance management
• Investment structure
• Contribution strategy
• Retirement planning
• Estate planning

The introduction of Division 296 does not mean immediate action is required for everyone. However, understanding the potential impact early can help create a more effective long-term strategy.

Final Thoughts

Division 296 tax represents a significant change for Australians with larger superannuation balances. However, it does not mean superannuation is no longer valuable. The key is understanding how the new rules interact with your personal circumstances and long-term goals. For some individuals, continuing to maximise superannuation benefits may remain the right approach. For others, combining super with investments held outside super may provide greater flexibility and control. A strategic review can help determine the most appropriate approach for your situation.

Frequently Asked Questions

Is super still tax effective after Division 296?

Yes. Superannuation can still provide significant tax advantages, even after Division 296 applies to larger balances.

Does Division 296 tax my entire super balance?

No. The additional tax applies only to the relevant proportion of earnings connected to amounts above the applicable threshold.

Does Division 296 apply from 1 July 2026?

Yes. The measure applies from the 2026–27 financial year.

Will everyone with more than $3 million in super pay Division 296 tax?

Not necessarily. The outcome depends on your balance, earnings and individual circumstances.

Should I move money out of super once I reach $3 million?

Not automatically. The decision depends on your retirement objectives, tax position, investment strategy and estate planning needs.

Is an investment company better than super?

Not always. An investment company may provide flexibility, but it also has different tax and administration considerations.

How Can We Help?

If your superannuation balance is approaching or exceeding $3 million, Camden Professionals can help review your current position and understand how the Division 296 changes may affect your broader wealth strategy. Professional advice can help you assess:

• Superannuation strategies
• Investment structures
• Retirement planning
• Estate planning considerations

Contact Camden Professionals to discuss your circumstances and explore your available options.

General Information Disclaimer

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any person. Any advice contained on this page and on this website is General Advice and does not consider any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals and/or Investax Group, its officers, representatives, employees, and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

For many Australian parents, taking time away from work to care for a new child can affect long-term retirement savings. From 1 July 2025, the Australian Government introduced the Paid Parental Leave Superannuation Contribution (PPLSC) for eligible recipients of government-funded Parental Leave Pay.

The Australian Taxation Office (ATO) calculates and pays the contribution directly into the eligible parent’s superannuation fund. Parents do not need to make a separate application.

This article explains eligibility, how the contribution is calculated, when it is paid, how it is taxed and what parents should check to ensure their payment is made correctly.

What Is the Paid Parental Leave Superannuation Contribution?

The Paid Parental Leave Superannuation Contribution (PPLSC) is a superannuation contribution paid by the ATO on eligible government-funded Parental Leave Pay.

The measure applies where a child is born or adopted on or after 1 July 2025 and the parent is eligible for Australian Government Parental Leave Pay. The contribution is calculated using the applicable superannuation guarantee (SG) rate. The current SG rate is 12%, with an interest component included because the contribution is paid after the relevant financial year.

Who Is Eligible for Paid Parental Leave Super?

You may be entitled to a PPLSC if:

• your child was born or adopted on or after 1 July 2025
• you receive government-funded Parental Leave Pay
• you meet the eligibility requirements for the Australian Government Paid Parental Leave scheme
• you have an eligible superannuation account into which the contribution can be paid.

Eligible parents do not need to submit a separate claim. The ATO calculates the contribution automatically.

How Much Superannuation Will You Receive?

The PPLSC is generally calculated by applying the applicable SG rate to eligible Parental Leave Pay.

For example, if a parent receives $20,000 of eligible Parental Leave Pay, a simplified calculation at 12% would be:

$20,000 × 12% = $2,400

The actual contribution may differ because an interest component can be included. The amount ultimately received depends on the Parental Leave Pay received and the calculation required under the legislation.

When Will the Paid Parental Leave Super Contribution Be Paid?

The PPLSC is not paid at the same time as Parental Leave Pay.

The ATO pays the contribution after the end of the financial year in which the relevant Parental Leave Pay was received. Payments commenced from July 2026 for eligible Parental Leave Pay received during the 2025–26 financial year.

Parents should therefore not expect the contribution to appear in their super fund immediately after receiving Parental Leave Pay. The ATO will notify eligible recipients when the contribution has been paid.

Does the ATO Pay the Superannuation Directly?

Yes.

The PPLSC is paid directly by the ATO to the parent’s superannuation fund. In most circumstances, the contribution will be paid into the fund to which the parent’s superannuation contributions are currently being made.

Parents generally do not need to contact their employer or make a separate claim with their super fund.

What Do Parents Need to Do?

Although the PPLSC is calculated and paid automatically, parents should check several important details.

1. Check Your Personal Details

Make sure your name, address and other identifying information are correct with both Services Australia and the ATO. Your details should be consistent across government records.

If you have recently changed your name, update your details with both agencies. Incorrect personal information can delay payment.

2. Check Your Tax File Number

Your Tax File Number (TFN) should be correctly recorded with your superannuation fund.

Check that your name, address and TFN details are consistent between the ATO and your super fund. If your TFN has not been provided to your super fund, additional tax may apply to certain superannuation contributions.

3. Check Your Super Fund Details

Confirm that the ATO has the correct superannuation information, including your:

• super fund name
• member number
• TFN
• name and address
• nominated superannuation account.

Checking these details can help prevent delays or payments being directed incorrectly.

What Happens If You Share Parental Leave Pay?

Parents can share Parental Leave Pay, subject to the applicable rules.

Where Parental Leave Pay is shared between two eligible people, each person can receive a PPLSC based on their respective share of the payment.

How Is Paid Parental Leave Super Taxed?

The PPLSC is generally treated as a concessional superannuation contribution.

The ATO confirms that the contribution will generally be taxed at 15% in the superannuation fund. It also counts towards the parent’s concessional contributions cap for the financial year in which the contribution is made.

Parents who also receive employer superannuation contributions, salary sacrifice contributions or make personal deductible contributions should consider their total concessional contributions.

Does the PPLSC Count Towards Your Concessional Contributions Cap?

Yes.

The PPLSC counts towards the concessional contributions cap. This means it needs to be considered alongside:

• compulsory employer superannuation contributions
• salary sacrifice contributions
• personal contributions claimed as a tax deduction
• other concessional contributions.

Why This Matters

For parents who have already made significant concessional contributions during the year, the additional PPLSC could contribute to an excess concessional contribution position.

This may be particularly relevant to higher-income earners, people making salary sacrifice contributions and those using unused concessional contribution caps from previous years.

If you are close to your concessional contributions cap, review your superannuation position before making additional voluntary contributions.

Can the PPLSC Cause an Excess Concessional Contribution?

Potentially, yes.

Because the PPLSC counts towards the concessional contributions cap, it must be included when calculating total concessional contributions. If contributions exceed the applicable cap, the ATO has processes for dealing with excess contributions.

Special circumstances may also apply in some situations. Parents concerned about exceeding their cap should consider obtaining professional tax or superannuation advice before making additional contributions.

Is the Paid Parental Leave Super Contribution Taxable Income?

The PPLSC is a superannuation contribution, rather than salary or wages paid directly to the parent.

It is generally taxed within the superannuation environment rather than as ordinary taxable income in the parent’s hands. The ATO confirms that it is generally taxed at 15% in the super fund.

The PPLSC is also not considered income for social security, family assistance and child support purposes.

Does the Employer Have to Pay Super on Parental Leave Pay?

No.

The introduction of the PPLSC does not require employers to calculate and pay superannuation guarantee contributions on government-funded Parental Leave Pay.

The ATO pays the PPLSC directly to the employee’s superannuation fund, and employers do not need to calculate or pay the contribution.

What Does the Employer Need to Do?

Employers do not need to:

• calculate the PPLSC
• pay the PPLSC
• send the PPLSC to the employee’s super fund
• make a separate superannuation payment for government-funded Parental Leave Pay.

The ATO handles the PPLSC after the relevant financial year ends.

Employers should nevertheless ensure payroll records correctly identify Parental Leave Pay separately from amounts that attract normal superannuation guarantee obligations.

What If Your Parental Leave Pay Is Adjusted?

If Services Australia subsequently adjusts your Parental Leave Pay, the amount of PPLSC you are entitled to may also need to be adjusted.

This could occur because of an overpayment or another change to your entitlement. Parents should keep their Services Australia payment records and check their superannuation account when the PPLSC is paid.

Why the New Superannuation Payment Matters

Taking time away from employment to care for children can create an interruption to compulsory employer superannuation contributions.

Under the previous arrangements, a parent receiving government-funded Parental Leave Pay could receive the government payment without an equivalent superannuation contribution. The PPLSC helps reduce this retirement savings gap by providing a contribution linked to eligible Parental Leave Pay.

Over a long working life, additional superannuation contributions can have a meaningful effect because investment earnings may compound over time.

A Simple Example of the New Parental Leave Superannuation Rules

Consider a parent who receives $20,000 of eligible Parental Leave Pay.

At a 12% superannuation rate, the simplified calculation is:

$20,000 × 12% = $2,400

An interest component may then be added because the PPLSC is paid after the end of the relevant financial year.

The contribution would generally be paid into the parent’s superannuation fund and taxed at 15% within the fund. It would also count towards the parent’s concessional contributions cap.

This is a simplified example only. The actual PPLSC is calculated under the legislation and may vary depending on the circumstances.

What Parents Should Check Before the ATO Pays Their Super

Parents receiving Parental Leave Pay should consider these steps:

1. Check your ATO personal details.
2. Check your Services Australia details.
3. Make sure your name and date of birth are consistent across records.
4. Check that your TFN has been provided to your super fund.
5. Confirm your super fund account is active and current.
6. Review your concessional contributions for the financial year.
7. Consider the PPLSC when planning salary sacrifice or personal deductible contributions.
8. Check your super account after the ATO makes the payment.

These checks can help reduce the risk of a delayed or incorrectly directed contribution.

How the Paid Parental Leave Super Contribution Fits Into Your Retirement Strategy

The PPLSC should not be considered in isolation.

Parents returning to work after parental leave may also benefit from reviewing their broader superannuation strategy, including:

• employer superannuation contributions
• salary sacrifice arrangements
• unused concessional contribution amounts
• personal deductible contributions
• superannuation investment options
• insurance held through super
• beneficiary nominations
• spouse contribution strategies
• overall retirement goals.

The PPLSC is designed to help maintain retirement savings while a parent receives government-funded Parental Leave Pay. However, parents may still experience a broader interruption to retirement savings during periods away from paid employment.

Frequently Asked Questions About Paid Parental Leave Superannuation

Does everyone receiving Parental Leave Pay receive superannuation?

Eligible recipients can receive the PPLSC where the child is born or adopted on or after 1 July 2025 and the person receives eligible government-funded Parental Leave Pay. The ATO calculates the contribution automatically.

When did Paid Parental Leave superannuation start?

The PPLSC applies to eligible Parental Leave Pay for children born or adopted from 1 July 2025. Payments of the resulting superannuation contributions began from July 2026, after the relevant financial year ended.

Do I need to apply for the Paid Parental Leave Superannuation Contribution?

No. If you are eligible, the PPLSC is calculated and paid automatically. You do not need to submit a separate claim for the superannuation contribution.

How much super do I get on Paid Parental Leave?

The contribution is based on the applicable superannuation guarantee rate. The current rate is 12%. An interest component is also included because the contribution is paid after the relevant financial year.

Is the Paid Parental Leave Super Contribution taxed?

Yes. The ATO states that PPLSC is generally taxed at 15% in the superannuation fund.

Does Paid Parental Leave super count towards my contribution cap?

Yes. PPLSC counts towards your concessional contributions cap. This should be considered when making salary sacrifice or other concessional superannuation contributions.

Does my employer have to pay the PPLSC?

No. The ATO pays the PPLSC directly to the employee’s superannuation fund. Employers do not need to calculate or pay this contribution.

Can my employer make additional super contributions while I receive Parental Leave Pay?

Yes. Employers can choose to make voluntary superannuation contributions, although they are not required to pay compulsory superannuation on government-funded Parental Leave Pay.

What happens if I share Parental Leave Pay with my partner?

Each eligible person can receive a PPLSC based on their respective share of Parental Leave Pay.

What happens if I change super funds?

You should ensure your current superannuation and personal details are correctly recorded. The ATO generally pays the PPLSC into the fund where your superannuation contributions are currently being paid.

What if I am close to my concessional contributions cap?

You should take the PPLSC into account when calculating your total concessional contributions. If you are close to your cap, consider obtaining professional advice before making additional concessional contributions.

Key Takeaway for Australian Parents

The Paid Parental Leave Superannuation Contribution is an important change to Australia’s parental leave system.

For eligible parents of children born or adopted from 1 July 2025, government-funded Parental Leave Pay can now result in an additional superannuation contribution paid directly into their super fund.

The payment is automatic, is generally taxed at 15% within super and counts towards the concessional contributions cap. Parents should make sure their ATO, Services Australia and superannuation records are accurate and consider the PPLSC when reviewing their overall superannuation contribution strategy.

For employers, the key message is simpler: you do not need to calculate or pay the PPLSC. The ATO is responsible for paying the contribution directly to the employee’s super fund after the relevant financial year.

Sources

• Australian Taxation Office – Paid Parental Leave Superannuation Contribution
• Services Australia – About the Paid Parental Leave scheme
• Services Australia – How much Parental Leave Pay you can get
• Services Australia – Employers’ role in the Paid Parental Leave scheme
• Federal Register of Legislation – Paid Parental Leave Act 2010

General Information Disclaimer

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any person. Any advice contained on this page and on this website is General Advice and does not consider any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals and/or Investax Group, its officers, representatives, employees, and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

Estate planning today requires much more finesse than a one-time document. With almost one in three Australian families now classified as blended, ensuring that all loved ones are fairly included and protected is critical. Without an up-to-date, legally sound plan, biological children or stepchildren risk being unintentionally excluded

Key Strategies for Blended Family Estate Planning

1. Mutual Wills and Testamentary Trusts

A Mutual Will Agreement ensures both partners agree on specific terms—terms that cannot be revised after death, preserving provisions even if the surviving spouse later changes their Will.

A Testamentary Trust, established through your Will, directs assets into a trust for your beneficiaries. This structure offers stronger control, potential tax efficiencies, and helps protect assets from disputes or external claims—especially for complex blended families.

2. Asset Ownership Structures

How you own assets matters: joint tenancy transfers assets automatically to the surviving co-owner, bypassing the estate and potentially disadvantaging children from previous relationships. Holding property as tenants in common,or structuring a life interest for a surviving spouse (allowing them to reside in the property before it passes to your children), maintains better control and fairness.

3. Binding Financial Agreements (BFAs)

Prenups and postnups help define how assets are managed during separation or after death. These agreements can reduce later disputes, ensuring clarity and fairness across blended family arrangements.

4. Superannuation and Tax Considerations

Super benefits to a spouse are tax-free, but benefits paid to adult children may attract tax of up to 17%. In many cases, it’s more tax-efficient to direct super to your spouse and allocate other assets to your children.

Using inheritance funds wisely—such as paying down debt or contributing to super—can enhance long-term financial security. With super’s transfer balance cap rising to $2 million, couples could potentially generate up to $100,000 each annually in tax-free retirement income under the right strategy.

5. Stepchildren, Inheritance Rights & Family Provision Claims

By law, stepchildren in Australia have no automatic right to inherit unless explicitly named. Without intentional inclusion, stepchildren and other dependants can be unfairly excluded.

However, new developments—like in South Australia—are expanding stepchildren’s ability to make claims, further highlighting the need for clear, legally sound estate plans.

 

6. The Dangers of Intestacy

If you die without a valid Will, your estate follows state intestacy laws, which often do not reflect your personal wishes. Stepchildren are typically excluded, and distant relatives could unexpectedly become beneficiaries

Why Regular Reviews and Open Communication Matter

Estate plans are not “set-and-forget” documents. They need regular reviews—ideally every 3–5 years or following major life events like remarriage, births, or significant acquisitions.

Open communication within your family reduces misunderstandings and disputes. Clear expectations paired with legal clarity helps prevent conflicts during emotionally fraught times.

High-Profile Cases: Why Proactivity Is Essential

A recent case covered by The Australian underscores the importance of robust estate planning—especially for high-net-worth individuals with complex relationships. The use of testamentary trusts was highlighted as a key measure to protect inheritance from external claims, while also ensuring wealth remains with intended beneficiaries. The alternative? Estate disputes, asset erosion, or unintended outcomes.

Conclusion & Key Takeaways

Estate planning in Australia, especially for blended families, demands careful, dynamic strategies—not just a standard Will.

• Use Mutual Wills and Testamentary Trusts to safeguard intentions and protect assets.
• Structure asset ownership wisely with tenants in common or life interests to support complex family needs.
• Establish Binding Financial Agreements to pre-define asset management and reduce conflict.
• Consider tax-efficient strategies—especially around superannuation.
• Explicitly include stepchildren and other beneficiaries to avoid inadvertent exclusion.
• Always have a valid Will to avoid intestacy and unintended outcomes.
• Review and update your estate plan regularly, particularly after key life events.
• Communicate openly with your family to align expectations and minimize disputes.

By combining legal foresight with thoughtful planning, blended families can ensure fairness, minimize conflict, and uphold their legacies—giving everyone the security and clarity they deserve.

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We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

For many Australians, superannuation is one of their largest assets — yet it’s often misunderstood when it comes to estate planning. A common misconception is that super automatically forms part of your Will. It doesn’t.

Unless you take specific legal steps, your super fund’s trustee will decide who receives your super upon your death, which can result in unintended beneficiaries and avoidable tax bills.

Super Is Not Automatically Part of Your Estate

Superannuation is held in a trust by your super fund. That means it isn’t automatically dealt with under your Will unless you instruct your super fund to pay your death benefit to your Legal Personal Representative (LPR) — the person managing your estate.

Instead, your super fund trustee has the discretion to pay the benefit to one or more of your dependants or estate, unless you’ve provided formal instructions.

Types of Death Benefit Nominations

1. Binding Death Benefit Nomination
   • Legally obliges the trustee to follow your instructions.
   • Must be valid and often needs to be renewed every three years.
   • Some funds offer non-lapsing binding nominations that don’t expire.
2. Non-Binding Nomination
   • Shows your preference, but the trustee has the final say.
   • Useful as a guide, but offers less certainty.
3. Reversionary Pension
   • Applies if you’re in the pension (retirement) phase.
   • Allows your spouse or dependent to continue receiving the pension income after your death.
   • Often more tax-effective.
4. No Nomination
   • The trustee makes the decision under fund rules and legal definitions of dependants.

The Tax Consequences: Who Gets What, and How Much?

The tax treatment of your super death benefit depends on who receives it:

• Tax-Free: Paid to dependants under tax law — spouse, de facto, child under 18, or someone financially dependent on you.
• Taxable (15% to 30%): Paid to adult children or others considered non-dependants for tax purposes.
• Through the estate? Care is needed. A payment to your Legal Personal Representative (your estate) can still result in significant tax for adult children if not planned correctly.

Estate Planning Tips

• Review nominations regularly: Every 2–3 years, or after major life events (divorce, new child, death of a beneficiary).
• Beware of lapsing nominations: Expired binding nominations = trustee discretion.
• Integrate super into your broader estate plan: Work with your lawyer or financial adviser to avoid tax inefficiencies or disputes.
• Ensure your fund allows binding nominations: Not all do. SMSFs have different rules — seek tailored advice.
• Consider reversionary pensions: Especially if you’re in retirement phase and want to keep income flowing to a spouse.

 

FAQs: Leaving Super in Your Will

Q: Can I include my super in my Will?

A: Only if your super is directed to your estate via a valid binding nomination to your Legal Personal Representative. Otherwise, your Will won’t apply.

Q: What happens if I don’t make a nomination?

A: Your super fund trustee will decide who receives your benefit, choosing from your dependants or your estate.

Q: Who qualifies as a ‘dependent’?

A: Under super law: your spouse (including de facto), children under 18, or someone financially dependent on you or in an interdependency relationship with you.

Q: Are adult children taxed on super death benefits?

A: Yes. If they are not considered tax dependants, they may pay up to 15% or 30% tax on taxable components.

Q: What’s the difference between binding and non-binding nominations?

A: Binding nominations must be followed (if valid). Non-binding nominations are just a guide — the trustee has final say.

Q: Can I change or cancel a nomination?

A: Yes. You can update or cancel a nomination at any time by lodging a new form with your super fund. Make sure to follow their process.

Superannuation doesn’t automatically follow your Will — and unintended consequences can arise if you don’t plan ahead. A valid, up-to-date binding nomination, supported by strategic estate and tax planning, ensures your super is distributed according to your wishes and in the most tax-effective way.

Need help reviewing your nomination or building a superannuation estate plan? Speak to your accountant or legal professional and take control of your legacy.

—————BOOK YOUR EXCLUSIVE 15 MINUTE ZOOM CONSULTATION————-

We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

If you’re planning to sell your home later in life, you may have a valuable opportunity to supercharge your retirement savings — even if you’re already retired or have a high super balance.

Since 1 January 2023, Australians aged 55 or older can contribute up to $300,000 each (per person) into superannuation from the proceeds of selling their primary residence, without impacting their usual contribution caps. Known as a downsizer contribution, this strategy is designed to help older Australians boost their super balances as they transition to retirement — but it comes with specific rules, and it may not be suitable for everyone.

Here’s what you need to know to decide if this opportunity is right for you.

Key Eligibility Rules

To qualify for the downsizer contribution:

• You must be 55 years or older at the time of contributing.
• The home must have been owned for 10 years or more, by you or your spouse.
• The home must have been your main residence at some point.
• The contribution must be made within 90 days of settlement.
• You must submit the ATO “Downsizer contribution into super” form before or when the contribution is made.
• You can’t claim a tax deduction for the contribution.
• You must not have made a downsizer contribution previously.

Importantly, the $300,000 limit applies per person — so a couple could contribute up to $600,000 combined, provided the total sale proceeds allow for it.

Reference: ATO – Downsizer contributions

Pros of Making a Downsizer Contribution

1. Super is a Tax-Effective Investment Structure

Downsizer contributions go into your tax-free component of super. Earnings on these contributions in retirement phase are generally tax-free, and the balance may not be taxed upon death when passed to non-dependent beneficiaries.

2. You Can Contribute Regardless of Super Balance or Work Status

Even if your super balance is over $2 million, or you’ve already retired, you can still make a downsizer contribution — unlike many other types of contributions that are limited by these factors.

3. Helps Reduce Future Death Tax

Because downsizer contributions increase your tax-free component, they can help reduce or eliminate the 15% tax that may otherwise apply if your super is passed to non-dependents (like adult children) after your death.

4. Property Doesn’t Need to Be Fully CGT-Exempt

Downsizer contributions are allowed even if:

• The home was partly rented
• The land is over 2 hectares
• The home was rebuilt or built on previously purchased land
• You only owned a share of the property (e.g. as a tenant in common)

5. Flexibility to Use Assets

You can contribute assets you already own (e.g. shares, other investments) into your super to fund the downsizer contribution, provided they match the cash value of your sale — particularly useful if the cash from your home sale is needed to purchase a new residence.

Considerations and Drawbacks

No Immediate Tax Deduction

Downsizer contributions are non-concessional and not deductible, so if you have a high taxable income, you may want to explore making a concessional (deductible) contribution instead — especially if you have carry-forward concessional cap room.

You Can Only Use It Once

The downsizer opportunity is a one-time-only benefit, so if you might benefit more from using your standard non-concessional cap or future concessional caps, timing is important.

Access to Super May Be Limited

If you’re under age 65 and still working, you may not yet meet a condition of release. This means the money will be locked in super until you retire or satisfy another release condition — which could be an issue if you need those funds to buy your next home.

Centrelink Impacts

While your principal home is exempt from Centrelink’s assets test, once the sale proceeds are moved into super (and you’re over pension age), the balance may be deemed and assessed under both the income and assets test — potentially reducing your Age Pension or eligibility for the Commonwealth Seniors Health Card.

What Will You Live In Next?

Selling your home to make a contribution sounds appealing, but be sure to consider the cost of your next residence. Will there be enough money left to fund your downsizer strategy?

 Summary of Downsizer Contribution Rules

Requirement	Details
Minimum Age	55 years (from 1 Jan 2023)
Contribution Limit	$300,000 per person
Ownership Period	10+ years (you/spouse), includes land
Residency Requirement	Must have lived in the property at some point
Timing of Contribution	Within 90 days of property settlement
Form Required	ATO Downsizer contribution into super form
Can you deduct the contribution?	No
Can it be used more than once?	No

Conclusion: Is the Downsizer Strategy Right for You?

The downsizer contribution scheme is one of the most generous superannuation concessions available to older Australians — offering a rare opportunity to boost your super balance, even after retirement or when your super is already above standard contribution limits.

But just because you can make a downsizer contribution doesn’t mean you should. Consider your:

• Access to super
• Taxable income
• Centrelink entitlements
• Next housing needs
• Estate planning goals

Because superannuation rules can be complex — and the decision can have lasting tax, income and social security implications — it’s wise to speak with your financial adviser or tax professional before making a move.

—————BOOK YOUR EXCLUSIVE 15 MINUTE ZOOM CONSULTATION————-

We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

A significant shift is coming to the way superannuation is paid in Australia. Under the proposed “Payday Super” reforms from the federal Labor government, employers will be required to make superannuation contributions within seven calendar days of each payday, starting 1 July 2026. This change aims to address chronic issues with unpaid super and improve retirement outcomes for millions of Australians.

With draft legislation currently open for consultation, it’s essential that both employers and employees understand the upcoming changes and how to prepare for them.

Why the Change?

According to the Australian Taxation Office (ATO), an estimated $5.2 billion in superannuation contributions went unpaid in the 2021–2022 financial year. Payday Super is designed to combat this issue and bring Australia’s superannuation payment system in line with modern work patterns.

Key objectives of Payday Super include:

• Ensuring super payments are more timely and transparent
• Reducing unpaid super by increasing employer accountability
• Boosting retirement savings, especially for younger and lower-income earners

Example: A 25-year-old earning the median income could be around $6,000 better off at retirement if contributions were made on payday rather than quarterly.

What Employers Need to Know

Employers will see the most immediate operational impact from Payday Super. Here’s what’s changing:

1. New Payment Deadlines

From 1 July 2026, all super contributions must be paid within seven calendar days of each payday, regardless of whether wages are paid weekly, fortnightly, or monthly.

2. Updated Terminology: “Qualifying Earnings” (QE)

This new term replaces “Ordinary Time Earnings (OTE)” and will be the basis for calculating super contributions and any shortfalls.

3. Closure of the SBSCH

The Small Business Superannuation Clearing House (SBSCH) will be shut down from 1 July 2026. Employers must adopt payroll software that is Payday Super-compliant.

4. Timeframe Flexibility

There will be limited grace periods for special circumstances—such as new hires, out-of-cycle payments, and events like natural disasters.

5. Revised Penalties

The Super Guarantee Charge (SGC) will remain in place but be redesigned to include:

• Notional earnings (interest)
• Administrative uplifts
• Penalties for failing to meet fund choice obligations

Note: Both on-time and late contributions will continue to be tax-deductible.

Tip for Employers:
Start consulting your payroll software provider now to confirm whether updates are being made to support Payday Super. Early action could prevent payroll headaches in 2026.

Changes to Payroll and Reporting

The implementation of Payday Super means major updates for payroll operations:

▪ Single Touch Payroll (STP) Reporting

Employers will be required to report both Qualifying Earnings (QE) and total super liabilities for each employee per pay cycle.

▪ Retirement of the ATO Clearing House

With the SBSCH shutting down, employers will need to transition to a commercial super clearing house—most modern payroll systems offer built-in solutions.

▪ Error Resolution Standards

Stricter SuperStream rules will be introduced to ensure payment errors are identified and corrected more quickly, enhancing the overall reliability of the system.

Getting Ready for Payday Super

While the start date is set for 1 July 2026, the transition period is key. Employers should use this time wisely.

•  Review Payroll Systems

Confirm your systems can process real-time super payments and report detailed contribution data.

•  Train Your Staff

Ensure your payroll and HR teams understand the new requirements and how they’ll affect processes and compliance.

• Employee Communication

Let your workforce know what Payday Super means for them. Improved transparency can boost employee trust and retention.

Tip:
Host an internal webinar or lunch-and-learn session to keep your team up to speed and proactively address any questions.

What Employees Can Expect

Employees stand to benefit significantly from Payday Super through faster fund growth, greater transparency, and stronger protections.

• Faster Growth

Super contributions will be deposited more frequently, allowing compound interest to work more efficiently.

• Greater Visibility

Employees can monitor in near real-time whether their super has been paid, reducing the chance of unpaid entitlements going unnoticed.

• Stronger Protections

With tougher enforcement measures and penalties for non-compliance, there’s greater assurance that super will be paid on time and in full.

• Quicker Allocation

Super funds will be required to allocate contributions to member accounts within three business days, a drastic improvement from the current 20-day timeframe.

Conclusion: Preparing for a New Super Era

Payday Super is a win for employees—especially younger Australians—offering faster growth and stronger safeguards. For employers, however, it presents significant operational changes that will require proactive preparation.

To stay ahead:

• Employers must upgrade systems, retrain staff, and plan for real-time payment compliance.
• Employees should monitor contributions and understand how more frequent payments can boost retirement savings.

The move to Payday Super marks a major shift in Australia’s superannuation landscape—but one that, with the right preparation, can benefit all parties involved.

—————BOOK YOUR EXCLUSIVE 15 MINUTE ZOOM CONSULTATION————-

We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

Choosing smart investment options for your superannuation is crucial for building a comfortable retirement. With various investment choices available, understanding their distinct characteristics and associated risks is key to selecting the best option for your financial future.

Premixed, Choice, and Lifecycle Options

Super funds typically offer several premixed investment options with different asset allocations, such as:

• Growth: These options focus on shares and property with the goal of achieving high returns over the long term. However, they come with a higher potential for short-term losses, making them suitable for investors with a longer investment horizon.
• Balanced: With around 70% invested in shares and property, balanced options target moderate returns with less risk than growth options. These are ideal for investors seeking growth but preferring less volatility.
• Conservative: These options primarily invest in fixed interest and cash, focusing on preserving capital with lower returns. They’re typically for more risk-averse individuals.
• Cash: Investing 100% in cash or similar instruments, cash options offer stability and capital preservation. These are best for those nearing retirement or highly risk-averse.
• Ethical: These investments exclude companies that don’t meet specific ethical standards, and their market risk varies. They offer an opportunity to align investments with personal values.

In addition to premixed options, some super funds allow investors to choose individual asset classes, such as Australian or international shares, or even direct investments in shares, exchange-traded funds (ETFs), or term deposits. These options offer more control but require a higher level of engagement with the investment strategy. Lifecycle investment options, on the other hand, automatically reduce exposure to higher-risk assets as you age, providing a hands-off approach for those who prefer a more passive strategy.

Understanding Your Risk Profile

When selecting an investment option, it’s essential to understand your risk profile—your comfort level with potential losses in pursuit of returns. Consider these factors:

• Risk tolerance: Assess how much market risk you’re willing to accept. Are you comfortable with short-term losses for potential long-term gains, or do you prefer stability?
• Investment horizon: The time remaining before you access your super influences your risk tolerance. Longer time horizons can often accommodate riskier investments, while shorter ones may call for more conservative approaches.
• Standard market risk measure: Super funds provide a standardized risk rating that predicts the likelihood of a negative return over 20 years. This rating can help you compare the risk levels of various investment options.

For example, a 30-year-old with a long-term investment horizon may be comfortable with the volatility of a growth option, while someone nearing retirement may prefer the stability of a more conservative approach. However, it’s important to balance stability with the risk of inflation, as overly conservative investments might not keep pace with inflation, potentially eroding purchasing power over time.

Conclusion

Choosing the right investment option for your superannuation requires careful consideration of your individual circumstances, risk tolerance, and long-term goals. It’s important to balance potential returns with your comfort level regarding market fluctuations. Utilizing online resources, such as ASIC’s Moneysmart website, can help guide your decision, and many super funds offer free guidance as well. Seeking professional advice, such as from a financial adviser, can also provide personalized insights to help you make an informed choice. Ultimately, a well-considered approach will put you on track for a more secure and prosperous retirement.

—————BOOK YOUR EXCLUSIVE 15 MINUTE ZOOM CONSULTATION————-

We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

---

General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

The December 2024 Consumer Price Index (CPI) data has confirmed that the superannuation general transfer balance cap will rise by $100,000, reaching $2.0 million for the 2025–2026 income year. This increase marks the latest adjustment to the cap, which was first introduced in 2017. The transfer balance cap is a lifetime limit on the amount of superannuation that can be transferred into one or more retirement phase income streams, where earnings on superannuation are currently tax-free. Additionally, income or withdrawals after the age of 60 are generally tax-free. The cap was introduced to promote fairness in the distribution of superannuation tax concessions and to ensure the long-term sustainability of the superannuation system.

Unlike other superannuation caps, such as contribution caps, the general transfer balance cap is adjusted annually based on the CPI, in $100,000 increments, rather than being indexed to Average Weekly Ordinary Time Earnings (AWOTE). The cap has increased progressively: from $1.6 million from 2017 to 2021, to $1.7 million from 2021 to 2023, to $1.9 million from 2023 to 2024, and will rise to $2.0 million for the 2025–2026 year.

Personal Transfer Balance Cap

The personal transfer balance cap is specific to each individual when they first start a retirement phase income stream. Your personal cap will match the general transfer balance cap at the time. Therefore, if you start your retirement phase income stream on or after 1 July 2025, your personal transfer balance cap will be set at $2.0 million.

If you began your income stream before 1 July 2025, your personal transfer balance cap would range from $1.6 million to $1.9 million, depending on the specific year. If you didn’t use the full amount of your personal transfer balance cap at the time, a proportional increase may apply to your personal transfer balance cap on 1 July 2025.

If you exceed your personal transfer balance cap, you must remove the excess from your income stream and either take it in cash or transfer it back into your superannuation account. An excess transfer balance tax would then be payable. The ATO will notify you if you’ve exceeded your cap.

Managing Transition to Retirement Income Streams (TRIS)

A Transition to Retirement Income Stream (TRIS) is a pension you can start before retirement once you reach age 60. Earnings on the TRIS are taxed as if it is still in accumulation phase, but pension payments are tax-free. Once you retire and notify your fund (or reach age 65), your TRIS becomes a retirement-phase pension, and earnings become tax-free.

If you’re turning 65 before 1 July 2025, and wish to maximize indexation, it is important to act now. You’ll need to commute your TRIS back to accumulation phase before your 65th birthday, otherwise, it will be assessed under the current $1.9 million cap.

Other Changes Related to Indexation

The indexation of the transfer balance cap will have a flow-on effect on other superannuation measures linked to this cap, including the total superannuation balance test. Starting from 1 July 2025, the total superannuation balance test will increase to $2 million. This balance determines eligibility for making after-tax non-concessional contributions and using the bring-forward rule.

If your total superannuation balance is below $2 million as of 30 June 2025, you’ll be able to make non-concessional contributions starting 1 July 2025, as long as you are under age 75. Additionally, the bring-forward rule will apply against the higher cap.

For those under 75 at 1 July 2025, and if you haven’t triggered the bring-forward rule in the previous financial years, you may contribute up to $360,000 if your balance is less than $1.76 million as of 30 June 2025, or up to $240,000 if it is between $1.76 million and $1.88 million.

Changes to Government Co-Contribution and Spouse Contributions Tax Offset

Eligibility for a government co-contribution and entitlement to the spouse contributions tax offset will also be affected by the total superannuation balance test, which will be $2 million from 1 July 2025.

Defined Benefit Income Cap

From 1 July 2025, the defined benefit income cap will increase to $125,000. For those receiving a defined benefit pension from a taxed scheme, 50% of pension payments above this amount will be included in assessable income and taxed at your marginal rate. If the pension is from an untaxed scheme (e.g., the Commonwealth Superannuation Scheme), the maximum tax offset from age 60 will be $12,500.

Contribution Caps

It’s important to note that the increase in the transfer balance cap does not affect the contribution caps. The pre-tax concessional contributions cap is indexed based on AWOTE in increments of $2,500. This change has not yet occurred. The non-concessional contributions cap, which is four times the concessional contributions cap, will only increase when the concessional cap is adjusted.

Conclusion

The increase in the superannuation general transfer balance cap to $2.0 million for the 2025–2026 income year presents significant opportunities for individuals looking to maximize their retirement savings. As the transfer balance cap affects various aspects of superannuation, such as total superannuation balance tests and eligibility for non-concessional contributions, it is essential to review your superannuation strategy in light of these changes. Working with a financial advisor can help you optimize your superannuation contributions, plan for retirement, and ensure that you stay compliant with the latest regulations.

—————BOOK YOUR EXCLUSIVE 15 MINUTE ZOOM CONSULTATION————-

We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

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General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.

Self-managed super funds (SMSFs) provide individuals with greater control and flexibility over their retirement savings, allowing them to make investment decisions and manage certain aspects of their fund operations. However, this autonomy comes with complexities, especially when it comes to determining which activities trustees can charge fees for, particularly when it involves related-party transactions or “mates rates.” Understanding the boundaries between trustee duties and professional services is essential to avoid compliance issues, particularly those surrounding non-arm’s length expenditure (NALE) and income (NALI) rules.

What Are SMSF Trustee Duties?

As a trustee of an SMSF, your primary responsibility is to ensure that the fund is managed in accordance with the Superannuation Industry (Supervision) Act 1993 (SIS Act) and other relevant regulations. Trustee duties include:

1. Managing Investments: Trustees are responsible for overseeing the SMSF’s investment strategy, including decisions on asset allocation. This is a core trustee duty and cannot be charged as a fee.
2. Record-Keeping: Proper documentation, including financial records, meeting minutes, and tax returns, must be maintained. Managing these tasks yourself is part of your obligations and cannot be billed to the SMSF.
3. Fund Administration: Tasks such as ensuring regulatory compliance, organising meetings, and lodging annual returns are part of the trustee role and cannot attract a fee.
4. Lodging Reports and Returns: Trustees must file an annual return for the fund, which includes income tax reporting and compliance details. While you can handle this on your own, many trustees choose to hire an accountant or professional SMSF administrator.

What SMSF Trustees Can Charge a Fee For

While trustees cannot charge for performing basic duties, there are specific situations in which fees may be charged for services beyond standard trustee obligations:

1. Professional Services: If you are a qualified professional (e.g., accountant, financial planner, or lawyer), you may charge fees for providing professional services to the SMSF. This includes preparing financial statements, providing legal advice, or managing complex investment transactions. However, these services must be provided at commercial rates and in line with industry standards to avoid triggering non-arm’s length income (NALI) rules.
2. Specialist Tasks: Trustees may outsource specialist services, such as investment management or legal work, and the providers of these services can charge for their services. These transactions must be conducted at arm’s length, with proper documentation in place to ensure compliance.

What SMSF Trustees Cannot Charge For

Trustees are prohibited from charging for tasks that fall under their core duties, including:

• General Fund Administration: Tasks like paying bills, organising meetings, and maintaining records cannot be billed to the SMSF.
• Management of Fund Investments: While trustees make investment decisions, they cannot charge for their time or expertise in managing the fund’s investments.
• Compliance Monitoring: Ensuring the fund remains compliant with regulations is a fundamental trustee responsibility and cannot be monetized.
• Day-to-Day Operations: Regular administrative tasks associated with managing the SMSF must be performed without remuneration.

The Risks of Non-Arm’s Length Expenditure (NALE)

Non-arm’s length expenditure (NALE) and income (NALI) rules are in place to prevent trustees from gaining an unfair tax advantage through discounted or subsidized transactions. If trustees provide services to the SMSF at below-market rates or offer “mates rates,” they risk triggering these rules.

If an SMSF is found to have incurred NALE, the income generated from that expenditure will be taxed at the highest marginal rate (45%) rather than the concessional tax rates that apply to superannuation funds. This can result in significant financial penalties and undermine the value of the fund.

How to Avoid NALE Breaches

1. Market Rate for Services: If providing professional services, ensure that the fees are consistent with what you would charge any other client.
2. Documentation: Always keep thorough records, including service agreements and invoices, that demonstrate the terms of your services are in line with industry standards.
3. Seek Professional Advice: When in doubt, consult SMSF specialists or financial advisors to ensure your fund remains compliant with the relevant rules.

Conclusion

Managing an SMSF offers significant control over your retirement savings, but it also comes with important responsibilities. Trustees must carefully distinguish between their duties as trustees and the provision of professional services. Charging fees for tasks that are part of trustee obligations or offering discounted services can result in non-arm’s length penalties, which could have a significant financial impact on the fund. By following the arm’s-length principles and seeking professional advice when necessary, trustees can effectively manage their SMSF while ensuring compliance with all regulations. This approach will help protect your retirement savings and avoid costly mistakes.

—————BOOK YOUR EXCLUSIVE 15 MINUTE ZOOM CONSULTATION————-

We offer a 15-minute no obligation consultation to existing property investors, first home buyers and small business owners who are looking at property investments, business and asset protection. To Book an Appointment simply click here and pick a time and date.

BOOK YOUR ZOOM APPOINTMENT HERE

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

How can we help?

If you have any questions or would like further information, please feel free to give our office on 08 9221 5522 or via email – info@camdenprofessionals.com.au  or arrange a time for a meeting so we can discuss your requirements in more detail.

---

General Advice Warning

The material on this page and on this website has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained on this page and on this website is General Advice and does not take into account any person’s particular investment objectives, financial situation and particular needs.

Before making an investment decision based on this advice you should consider, with or without the assistance of a securities adviser, whether it is appropriate to your particular investment needs, objectives and financial circumstances. In addition, the examples provided on this page and on this website are for illustrative purposes only.

Although every effort has been made to verify the accuracy of the information contained on this page and on this website, Camden Professionals, its officers, representatives, employees, and agents disclaim all liability [except for any liability which by law cannot be excluded), for any error, inaccuracy in, or omission from the information contained in this website or any loss or damage suffered by any person directly or indirectly through relying on this information.