On the 3rd February, struggling Aussies were stung with another 0.25% interest rate rise due to higher than expected inflation at 3.8% outside the 2-3% target range. This has left many scratching their head – fooled by the most recent interest rate cut (pre-election), where inflation was outside the target range. This leaves many questioning the independence of the RBA and screaming for the government to stop spending and stop blaming the private sector.
Transfer Balance Cap to increase from 1 July 2026
Following the release of the December 2025 inflation data, the general transfer balance cap will increase from $2,000,000 to $2,100,000 from 1 July 2026. The transfer balance cap is a limit on how much can be moved into superannuations tax-free retirement phase. This could provide tax effective retirement pension and non concessional contribution opportunities for SMSFs. It is important for the ATO to confirm this increase as soon as possible. Individuals who commence a retirement phase income stream for the first time after 1 July 2026 will have access to the full $2,100,000 limit. For some individuals there may be a benefit in deferring the commencement of a retirement income stream until on or after 1 July 2026.
The transfer balance cap limits the amount you can use to start a retirement phase income stream, so the increase in the transfer balance cap means you will be able to move more into the superannuation tax-free environment from 1 July 2026.
Concessional and non-concessional contribution caps likely to rise
The other caps are not based on CPI. They are actually indexed to the movement in Average Weekly Ordinary Time Earnings (AWOTE), an Australian Bureau of Statistics (ABS) measure representing the rise in the average gross weekly earnings of full-time adult employees, excluding overtime that are due out in February. It is almost certain now that the concessional contribution cap will also increase from $30,000 to $32,500 on 1 July 2026. This also means the standard annual non-concessional contribution cap (four times the contribution cap) will increase to $130,000 (or up to $390,000 under the 3-year bring-forward rule).
It is important for SMSF members to plan prior to 30 June and of course watch this space.
Disclaimer – The content has been prepared by Redwood Advisory Pty Ltd without taking account of the objectives, financial situation or needs of a particular individual and does not constitute financial product advice. This article should not be considered personal financial advice as it is intended to provide factual information only
