The new financial year is an ideal opportunity for business owners to strengthen their long-term wealth position through superannuation. With concessional contribution strategies firmly in focus, particularly following last year’s increase to the $30,000 cap, it’s the perfect time to reset, plan ahead, and boost retirement savings in a tax-effective way.
Superannuation remains one of the most legislatively supported and tax-advantaged tools for accumulating wealth, especially for those with fluctuating income or business-driven cash flow. Whether self-employed, operating through a company structure, or overseeing an SMSF, aligning your contribution strategy early in the financial year can support more impactful long-term outcomes.
At Equil Advisory, we help business owners, professionals, and SMSF trustees make the most of their super strategies by tailoring contributions to income, cash flow, and retirement goals from day one of the financial year.
Understanding Concessional Contributions
Concessional contributions are before-tax contributions made to a super fund. These include:
- Employer Super Guarantee (SG) contributions
- Salary sacrifice contributions
- Personal deductible contributions
These contributions are subject to a combined annual concessional contribution cap. For FY2025–26, the cap is $30,000 and applies to all individuals, regardless of age.
Concessional contributions are generally taxed at 15% within the fund—typically lower than an individual’s marginal tax rate, making them a powerful tool for reducing taxable income and growing retirement savings. However, individuals with taxable income over $250,000 may be subject to an additional 15% tax under Division 293, effectively bringing the tax on concessional contributions to 30%. This rule can catch high-income earners by surprise, so it’s important to factor it into your strategy early.
Important: Exceeding the $30,000 cap may result in additional tax and administrative penalties. Business owners with multiple income streams or super funds should monitor contributions across the year to stay within limits.
For a government overview of concessional caps, visit the ATO’s concessional contributions cap guide.
Leveraging the Carry-Forward Rule
The carry-forward rule allows eligible fund owners to make concessional contributions above the standard annual cap by utilising any unused cap amounts from the previous five financial years.
This ATO-approved provision enables larger, tax-deductible contributions in high-income years while remaining within concessional limits. It can significantly enhance both retirement savings and tax efficiency, provided timing and eligibility are carefully managed.
To qualify, the individual’s Total Superannuation Balance must be under $500,000 as at 30 June 2025. If eligible, they may contribute more than the $30,000 cap in FY2025-26 without triggering excess contribution penalties.
This strategy is particularly relevant for:
- Business owners with fluctuating profits
- Individuals who paused contributions during lower-income periods or COVID
- Those expecting a higher taxable income in the current financial year
Importantly, FY2025-26 is the final opportunity to use any unused concessional cap from 2019-20, as carry-forward entitlements expire after five years.
Carry-forward provisions can also support lump sum contributions during strong cash flow periods, offering flexibility while maintaining compliance with contribution limits.
Implementing Salary Sacrifice Strategies
Salary sacrifice remains an effective and consistent way to grow super while reducing assessable income, particularly for business owners who pay themselves a wage or salary.
By directing part of pre-tax income into super, these contributions reduce assessable income and are taxed at the super fund rate of 15%. This can result in significant tax savings for those on higher marginal rates.
However, total concessional contributions – including SG, salary sacrifice, and personal deductible contributions – must stay within the $30,000 cap for FY2025-26. This is where setting up a regular, automated, and compliant salary sacrifice arrangement early in the financial year can:
- Distribute contributions evenly
- Avoid last-minute June contributions
- Maximise long-term investment compounding
Making Personal Deductible Contributions
For those with irregular income, such as sole traders or contractors, personal deductible contributions offer flexibility to boost super as cash flow allows. These are voluntary contributions made from after-tax income and then claimed as a tax deduction by lodging a Notice of Intent with your super fund.
While they do count toward the concessional cap, personal deductible contributions can be especially useful for:
- Making lump sum contributions near year-end
- Reducing tax payable in high-income years
- Catching up for periods where regular contributions weren’t feasible
Timely documentation however is essential, both to ensure deductibility and to comply with fund requirements. Working with an experienced tax adviser like Equil Advisory can help ensure these contributions are executed correctly and strategically aligned with broader tax planning.
Strategic Timing of Contributions
Timing plays a vital role in maximising superannuation strategies.
Making concessional contributions earlier in the financial year increases the investment’s time in the market, supports smoother cash flow, and improves long-term outcomes. While many business owners delay doing this until FY end, spreading contributions across the year allows for more consistent, manageable investing.
Coordinating super contributions with key financial milestones, such as quarterly BAS lodgements, trust distributions, or performance reviews, can also help align your retirement planning with your overall business strategy.
Preparing for Legislative Changes: The $3M Super Tax
From 1 July 2025, if passed, individuals with superannuation balances exceeding $3 million will incur an additional 15% tax on a portion of their fund’s earnings, including unrealised capital gains. Known as Division 296, this measure brings the total tax on affected earnings to 30%.
Note: Division 296 is a personal tax liability, not a tax on the super fund itself.
The ATO calculates the tax annually using a formula that considers both realised and unrealised gains. A separate tax notice is issued directly to the individual, who can then choose to pay it out-of-pocket or request the amount be released from their super fund.
What Are “Affected Earnings”?
Division 296 applies to the proportion of earnings linked to the balance above $3 million. For example:
Total super balance = $4 million
Earnings for the year = $200,000
Excess = $1 million (above the $3M threshold)
Proportion subject to extra tax = 25% ($1M / $4M)
So: 25% of $200,000 = $50,000
Division 296 tax = 15% of $50,000 = $7,500
What Division 296 Means for High-Net-Worth Business Owners
This proposed change will have significant implications for SMSF trustees and high-net-worth business owners who have built large balances inside super.
Unlike public funds, SMSFs often hold concentrated or illiquid assets (like business premises or property) that may generate substantial unrealised capital gains, now taxed under Division 296 even if the asset hasn’t been sold.
SMSF trustees should take particular care if they are:
- Planning to reinvest business sale proceeds into super
- Using the carry-forward rule for large contributions
- Relying on estate planning strategies that depend on growing wealth inside super
Strategies to Manage the Impact
Given these changes, it is important for super fund owners to assess their position early in the financial year and consider strategies to manage potential tax implications. Depending on their circumstances, they may wish to explore:
- Splitting super balances between spouses
- Reviewing withdrawal and recontribution strategies
- Using alternative investment vehicles outside of super
These approaches can help reduce exposure to the additional 15% tax and support broader wealth planning objectives. As with any major structural shift, early consultation can help mitigate unintended tax consequences.
Equil Advisory works with clients to assess whether restructuring superannuation holdings or diversifying wealth structures may be appropriate under the new regime.
Get Ahead in FY2025–26 with the Right Super Strategy
With the new financial year underway, business owners have a renewed opportunity to take advantage of the $30,000 concessional contributions cap and build retirement savings in a tax-effective environment.
Whether through salary sacrifice, personal deductible contributions, or carry-forward strategies, acting early in FY2025–26 allows more time for contributions to compound and for taxable income to be managed effectively across the year.
For high-net-worth individuals, particularly SMSF trustees, this is also a critical window to assess the impact of the new $3 million Division 296 super tax and determine whether structural adjustments may be required to reduce future obligations.
Equil Advisory works with business owners, professionals, and SMSF trustees to develop tailored, forward-looking superannuation strategies that align with broader financial objectives. From contribution timing to tax optimisation, their advisers provide the clarity and confidence needed to make informed decisions.
Get in touch to speak with a specialist adviser and start the financial year with clarity and control.
