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Welcome to the March Adviser query of the month and technical briefing, an update of recent key technical developments, including the indexation of the transfer balance cap and concessional and non-concessional contribution caps for 2026-27, for financial advisers for the period from 28 January 2026 to 26 February 2026.

In this edition, the Adviser query of the month considers the effects of total super balance and the use of the carry-forward concessional contribution cap.

Adviser query of the month

Carry forward concessional contribution cap

Question

My client is age 60 and has a total super balance and concessional contribution (CC) history that is detailed in the table below.

Are they able to access their carry-forward CC cap despite their total super balance (TSB) exceeding $500,000 at 30 June on multiple occasions?

If yes, what amount of carry-forward cap is available in 2025-26?

Row

Year

TSB at prior 30 June

A. CC cap

B. CCs made

Unused CC cap for year (i.e. A-B)

1

2020-21

$400,000 (30 June 2020)

$25,000

$15,000

$10,000

2

2021-22

$450,000 (30 June 2021)

$27,500

$20,000

$7,500

3

2022-23

$500,000 (30 June 2022)

$27,500

$20,000

$7,500

4

2023-24

$550,000 (30 June 2023)

$27,500

$17,500

$10,000

5

2024-25

$525,000 (30 June 2024)

$30,000

$20,000

$10,000

6

2025-26

$475,000 (30 June 2025)

$30,000

None to date

$30,000

Total

 

 

 

 

$75,000

Answer

The only time TSB plays a role regarding the ability to use the carry-forward CC cap is at the 30 June of the prior year.

To use the carry-forward amount in 2025-26, the individual’s TSB at 30 June 2025 must be below $500,000.

That the client’s TSB was at least $500,000 at 30 June of 2022, 2023 and 2024 does not affect:

  1. The ability to use the carry-forward amount in 2025-26, and
  2. The ability to carry-forward the unused cap from any year where their TSB exceeded the threshold.

In terms of the amount that can be contributed, the question is often whether the 5-year amount includes the current year or not.

The carry-forward amount includes the 5 years prior to the current year. Therefore, the maximum CC cap available to the client for 2025-26 is $75,000. This is made up of the current year cap (i.e. $30,000) plus the carry-forward amount from the prior 5 years to 2020-21 (i.e. $45,000).

A few further points to note regarding the carry-forward CC cap include:

  • The carry-forward CC cap can only be accessed once the current year cap is exceeded
  • The carry-forward CC cap is reduced in order of earliest contributed.
    If this client were to make total CCs of $35,000 in 2025-26, this would firstly use the current year cap and then $5,000 of carry-forward CC from 2020-21, being the earliest period within the 5-year period.
  • The way in which the carry-forward CC cap amount is accessed is no different from making concessional contributions within the one year cap. Therefore it will generally be used by making either salary sacrifice employer contributions or personal deductible contributions in the usual manner. There’s no specific form or approach required, the ATO will automatically apply the carry-forward CC cap once the individual exceeds their 1-year cap. 

Threshold and rate changes

Transfer balance cap

The indexation of the general transfer balance cap (TBC) is determined by the consumer price index (CPI), with the indexed amount rounded down to the nearest $100,000.

The Australian Bureau of Statistics (ABS) has recently released the CPI data for the December 2025 quarter. This data confirms that the general TBC will be indexed, increasing from $2 million to $2.1 million for the 2026-27 financial year.

The extent to which an individual can benefit from this indexation is contingent upon their personal circumstances and previous use of their TBC. The following principles are applied to determine an individual’s personal TBC for the 2026-27 year:

  • Individuals who have not had a transfer balance account transaction prior to 1 July 2026 will be entitled to a personal TBC of $2.1 million.
  • Individuals who have, at any point before 1 July 2026, fully utilised their TBC will not be eligible for the 2026-27 indexation.
  • Individuals who have only used a portion of their TBC before 1 July 2026 will receive a proportional indexation on the unused portion of their cap. This is calculated based on their highest-ever transfer balance account value.

Further implications of the indexation of the general TBC include:

  • The total super balance (TSB) thresholds for the non-concessional contribution (NCC) caps will increase (outlined below).
  • The defined benefit income cap will increase to $131,250 for 2026-27, up from $125,000 for 2025-26.
  • In order to receive the Government co-contribution and spouse contribution tax offset, the contribution recipient’s TSB must be below $2.1 million at 30 June 2026, up from $2 million for contributions made in 2025-26.

Further information can be found here: ATO transfer balance cap

Concessional and non-concessional contribution caps for 2026-27

The indexation of the concessional (CC) and non-concessional contribution (NCC) caps is determined by earnings growth (specifically the average weekly ordinary time earnings (AWOTE) as measured by the ABS).

The ABS figures released on 26 February 2026 mean that the CC and NCC caps will be indexed as follows:

Cap

Current – 2025-26

New – 2026-27

CC

$30,000

$32,500

NCC

$120,000

$130,000

Indexation of both the general TBC (noted above) and the NCC cap result in an increase to the total super balance (TSB) thresholds for determining someone’s NCC cap. The new 30 June 2026 TSB thresholds for determining the NCC caps for next year are as follows:

NCC cap

TSB threshold(s)

3 years cap

$390,000

Less than $1,840,000

2 years cap

$260,000

At least $1,840,000 and less than $1,970,000

1 year cap

$130,000

At least $1,970,000 and less than $2,100,000

No cap

$Nil

$2,100,000 and above

Note: Those that are still in an NCC bring forward period for the 2026-27 year will have an NCC cap of their unused amount, provided their TSB is below $2.1 million at 30 June 2026. If their TSB is $2.1 million or more, their cap will be nil.

Increase to deeming rates from 20 March 2026

On 20 February 2026 the Government announced a 0.5% increase to both the Centrelink/DVA lower and upper deeming rates from 20 March 2026.

The new rates will be as follows:

Status

Deeming thresholds (1 July 2025 to 30 June 2026)

Deeming rate below threshold

Deeming rate above threshold

Single

$64,200

1.25% (up from 0.75%)

3.25% (up from 2.75%)

Couple

$106,200

 

This will be the second increase since the freeze on deeming rate increases ended on 1 July 2025.

Further information can be found here: Media Release

Legislative developments

Division 296 Bill enters Parliament

On 11 February 2026 the Government introduced two Bills to Parliament aimed at legislating the proposed Division 296 tax.

This follows the Treasury’s consultation on the revised approach to Division 296 tax covered in last month’s technical briefing.

The Bill is largely unchanged from the draft consultation and continues with the approach of aligning earnings with more common income tax concepts, two total super balance (TSB) thresholds and two tax rates, as well as indexation of the TSB thresholds.

There are a few differences between the draft and final Bill. These include:

  • An individual no longer has a TSB once they pass away. They may still be liable for Division 296 tax in the year they pass away (unless it occurs in 2026-27) where their TSB is above the lower threshold (commencing at $3 million) at the prior 30 June and they have positive Division 296 income for the year.
  • The exclusion of individuals from Division 296 tax where they die at any time during the 2026-27 year, not just before 30 June 2027 as proposed in the draft.
  • The exclusion of deferred notional gains from Division 296 income. Deferred notional gains relate to the 2017 super reforms where certain funds (mainly SMSFs) were able to reset the cost base of certain assets and defer the taxation of those gains to the year the asset is disposed of.   

The Bill is currently before the House of Representatives and is not yet law.

Further information can be found here: Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026 and Superannuation (Building a Stronger and Fairer Super System) Imposition Bill 2026

Low income super tax offset (LISTO) Bill

Accompanying the Bill containing the Division 296 tax was a section aimed at aligning the calculation of LISTO to the relevant legislative settings.

As noted in the Explanatory Memorandum to the Bill “over recent years, LISTO settings have remained the same while other aspects of the tax and superannuation system have changed. This means that some low income earners receive little or no concessional tax treatment on their superannuation contributions.”

The changes include:

  • An increase to the income threshold from $37,000 to $45,000 – the change will link the income threshold to a personal income tax rate threshold
  • An increase to the maximum LISTO from $500 to $810 – based on current rates and thresholds.

It is proposed that the change will apply from the 2027-28 year.

The Bill is still in Parliament and is not yet law.

Further information can be found here:

Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026

Consultation

Treasury

Access to super for victims of child sexual abuse – draft legislation

On 2 February 2026 Treasury released for consultation draft legislation aimed at helping victims and survivors of child sexual abuse access the offender’s super for court-ordered compensation payments.

From Treasury’s website, the draft law would:

  • Let victims and survivors apply to the Australian Taxation Office for information about a perpetrator’s super
  • Let victims and survivors seek the release of certain amounts to meet unpaid compensation orders
  • Make compensation debts survive a perpetrator’s bankruptcy, so victims and survivors can keep enforcing those debts.

The consultation closed on 20 February 2026, and the proposed changes are not yet law.

Further information can be found here: Consultation

Regulator developments

ATO

Payday Super

The Payday Super reforms commence from 1 July 2026 and aim to improve the frequency of super payments and reduce the amount of unpaid super by employers. The laws require employers to pay their super guarantee (SG) requirements at the same time as salary and wages rather than on a quarterly basis.

The ATO has now finalised its Practical Compliance Guideline Payday Super – first year ATO compliance approach (PCG 2026/1) which outlines how it will prioritise the application of its compliance resources to areas of high risk, to investigate employers who have not paid the minimum amount of SG contributions.

PCG 2026/1 categorises an employer’s actions into low, medium and high ‘Risk zones’ and outlines how they’re likely to approach each zone from a compliance perspective.

PCG 2026/1 ‘does not replace, alter or affect’ the ATO’s interpretation of the law and does not impact an employer’s obligation to pay SG contributions.

Further information can be found here:
PCG 2026/1 and ATO Payday Super resources

ASIC

Review of advice licensees that use lead generation services

On 18 February 2018 ASIC launched a review into financial advice firms using lead generation services, which market products and services to consumers. The regulator is concerned some lead generators inappropriately encourage consumers to switch superannuation funds, potentially leading to significant financial harm. ASIC's review will identify these arrangements and allow it to take enforcement action to protect consumers.

Further information can be found here: Media release

Important information

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