Three significant superannuation changes take effect on 1 July 2026, with payday super the biggest impact for employers.
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While much of the attention on Budget night focused on capital gains tax, negative gearing, and trust distributions, several significant superannuation changes are taking effect from 1 July 2026. These were largely legislated prior to the Budget but are significant enough to warrant a timely reminder. Our reference page on Australian tax and super rates covers the current thresholds.
The Three Changes at a Glance
| Change | Effective from | Who it affects | Key impact |
|---|---|---|---|
| Additional 15% tax on balances above $3m | 1 July 2026 | High-balance super members | Earnings on the portion above $3m taxed at 30% (up from 15%) |
| Transfer balance cap increase to $2.1m | 1 July 2026 | Members commencing or in retirement pension phase | Extra $100,000 available for tax-free pension phase |
| Payday super | 1 July 2026 | All small and medium employers | Super paid each pay run, not quarterly |
Higher Tax on Large Superannuation Balances
From 1 July 2026, if your total superannuation balance across all funds exceeds $3 million, the earnings attributable to the portion above that threshold will be subject to an additional 15% tax. This effectively doubles the tax rate on those earnings, from 15% to 30%. The Medicare Levy does not apply to superannuation earnings, so the combined rate is 30%, not 32%.
This legislation received Royal Assent on 13 March 2026 and is now law. The tax applies to taxable income, not unrealised capital gains as originally proposed. The ATO will issue an assessment and you have 84 days to pay, with the option to release funds from your superannuation account to meet the liability.
Worked example: Earnings on a $4m super balance
Member with a $4 million total super balance earning a 7% return. $1 million of the balance sits above the $3m threshold.
| Calculation | Amount |
|---|---|
| Total earnings (7% of $4m) | $280,000 |
| Earnings attributable to balance above $3m (1/4) | $70,000 |
| Standard 15% tax on the $70,000 | $10,500 |
| Additional 15% tax on the same $70,000 | $10,500 |
| Total tax on the above-$3m earnings | $21,000 (30% effective) |
Watch out
The $3m threshold is not indexed in the current legislation. Over time, more Australians will be brought within scope as balances grow with contributions and earnings. Forward planning matters even for members who are not yet close to the threshold.
Transfer Balance Cap Increase
The transfer balance cap is the maximum amount you can hold in a tax-free retirement phase pension. It increases from $2.0 million to $2.1 million from 1 July 2026. This increase matters if you have previously been unable to move your full intended balance into retirement phase, or if you are planning to commence a retirement phase pension in the near future.
The indexation works in incremental ways depending on your previous transfer balance use. Your personal transfer balance cap may not move by the full $100,000 if you have already drawn part of your existing cap.
Payday Super
From 1 July 2026, employers are required to pay superannuation contributions at the same time as wages, rather than quarterly. This is a significant change for small and medium businesses that have managed cash flow by paying super on a quarterly cycle. The flip side is fewer compounding errors and disputes – our article on the Super Guarantee Charge statement describes what happens when contributions are late under the current rules.
| Aspect | Before 1 July 2026 | From 1 July 2026 |
|---|---|---|
| Payment frequency | Quarterly | With each pay run |
| Maximum time before contribution received by fund | 28 days after quarter end | 7 business days after pay date |
| Reporting framework | Single Touch Payroll | Single Touch Payroll (extended for compliance tracking) |
| Cash flow impact | Up to 3 months of super held by employer | Super remitted with each pay run |
For employers, this has two practical effects.
- Cash flow. The first quarter under the new rules is the tightest one. Businesses that were used to holding super for up to three months before remitting it now need to remit weekly or fortnightly. That working capital adjustment can be material for tight-cash businesses
- Payroll systems. Most major payroll platforms have updated their systems to handle the change automatically. Smaller bookkeeping arrangements or manual processes may need to be reviewed and adjusted well before 1 July 2026
What You Should Do
Three groups of clients should engage with us well before 1 July 2026.
- If your super balance is approaching or has exceeded $3 million, the new earnings tax needs attention. Our SMSF accounting service can review what is held inside super versus outside
- If you are planning to commence a retirement pension, the cap increase may present a planning opportunity
- If you are a small business employer, the move to payday super requires action on your payroll systems before the changeover
Please contact us to discuss your situation. The payday super change in particular has practical setup work that should not be left until the last fortnight.
This article is part of our 2026-27 Federal Budget guide. Read the full overview for a summary of every measure announced on Budget night.
