In this guide
What Labor’s win means for super
The Albanese Labor government’s emphatic election victory means its plan to double the tax rate on super funds with a balance of more than $3 million from 15% to 30% will now proceed.
Controversially, the plan (known as Div 296) includes the taxation of unrealised capital gains.
Passage of the legislation will depend on the make-up of the Senate, but Labor can now claim it has a mandate for the change.
Tax cuts for all taxpayers will also go ahead. From 1 July 2026, the tax rate for the lowest income tax bracket will be cut from 16% to 15%, and then to 14% from 1 July 2027.
The incoming government is also expected to proceed with its Delivering Better Financial Outcomes reforms. This will allow super funds to offer more targeted personal advice to members on issues such as investment choice, retirement options and insurance.
The industry is now waiting to see which minister will be given responsibility for superannuation and financial services.
Labor’s victory also means the Coalition’s policy to allow early access to super for housing is also off the agenda, at least for the next three years.
Financial advisers want Labor to do more
Labor’s honeymoon period may be short-lived where super and financial services are concerned.
The Financial Advice Association Australia (FAAA) is calling on the new Labor government to fix the Compensation Scheme of Last Resort (CSLR), instigate a financial services razor gang to cut red tape and support new entrants to the financial advice profession.
Its priority actions for the new government also include providing adviser access to the ATO portal, delivering effective Delivering Better Financial Outcome (DFBO) reforms and implementing a standardised fee consent form.
“Australians are increasingly recognising the vital role that quality advice plays in achieving financial wellbeing. This is a time for genuine policy progress, and we are ready to assist the government in delivering it,” FAAA chief executive Sarah Abood said.
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“One of the clearest messages from our members is that well-meaning but overly complex regulation has made financial advice harder to access and more expensive. We need to cut unnecessary red tape and ensure that advisers can focus on delivering great outcomes for their clients,” she said.
Fixing the CSLR so that advisers do not unfairly bear the cost of product failures is particularly important for the Association and it also called on the government to do more to grow the profession.
“We are optimistic about the opportunities ahead and confident that by working together, we can create a more sustainable, fair and accessible financial advice system for the benefit of all Australians,” Abood said.
ATO targets in-house SMSF audits
The Australian Taxation Office (ATO) is still finding numerous instances of in-house audits of self-managed super funds despite them being disallowed since 2020.
An ‘in-house audit’ refers to an auditor who works for a firm, or network firm, that also provides services such as accounting or administration to the same SMSF clients.
“In a recent review using data matching, we focused on auditors who still perform in-house audits. Our risk assessment shows around 800 auditors might still be doing in-house audits,” the ATO said in a statement.
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Auditors are only allowed to perform in-house audits in very limited circumstances.
The ATO recently reviewed 30 auditors suspected of doing in-house audits. As a result of the review, 14 auditors were referred to ASIC, six were deregistered voluntarily, eight received education and two were compliant.
“Firms must follow independence requirements when planning their structure and their audit engagements. They should not rely on one referral source for their fees. ASIC suspended three high-volume SMSF auditors linked to an SMSF administration provider for not considering these factors,” the ATO said.
General transfer balance cap to increase on 1 July 2025
The general transfer balance cap (TBC) will be indexed in line with inflation on 1 July 2025 and will increase by $100,000 from $1.9 million to $2 million. The defined benefit income cap (DBIC) will increase to $125,000 (from $118,750) for the 2025–26 income year.
The ATO is reminding people that the increase will have flow-through impacts for individuals with a personal TBC. These individuals will be entitled to an increase of their cap if they have not previously been at, or exceeded, their cap.
“Their increase will be a proportion of the $100,000 and will depend on their unused cap space. Individuals starting a pension for the first time on or after 1 July 2025 will be entitled to a personal TBC of $2 million,” the ATO said.
Future Fund weathers market storm
Australia’s sovereign wealth fund, the Future Fund, has reported investment returns of 7.9% for the 12 months to the end of the March quarter 2025 and added $17.8 billion to the fund over that period.
“This was a strong result that reflects the work we have been doing for the past four years to ensure the portfolio is resilient and flexible to a range of scenarios,” chief executive Raphael Arndt said.
“We are seeing consequential changes in geopolitical, economic and market environments at the moment and that is causing volatility and uncertainty for investors. Our expectation is that these conditions will lead to higher inflation and bond yields for an extended period. These are the conditions for which the portfolio has been built over the past five years, and it has behaved to our expectations in recent months,” he added.
The fund continues to have a high allocation to global equities, with 27% in developed markets and 5.8% in emerging markets in March 2025, compared to an allocation of 10.9% to Australian equities.
Funds must improve communication during market volatility
Few super funds provide prominent and clear communication to members during periods of market volatility, according to a recent white paper by Borromean Research.
Principal of Borromean, Duncan McPherson, conducted a broad desktop review of super and pension provider websites across Australia, the UK, the US, Canada and Europe (25 providers in total) for the white paper.
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“Our review found that while some super funds responded proactively to market volatility, many treated communication as a passive resource – available, but only if members knew where to look,” the paper states.
The white paper also suggests that the language used by funds in these instances is too technical and compliance-driven, in stark comparison to the simple, emotive language used by newspapers and publications, which many members may be getting their information from.
“Funds that anticipated member anxiety – and responded with visibility, empathy and practical tools – strengthened trust and reduced the risk of poor member decision-making,” the paper found.
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