The Institute of Financial Professionals Australia (IFPA) Superannuation and Financial Services team has pulled together a snapshot of the most important policy, regulatory and legislative developments for 2025.
This wrap-up highlights what has changed, what it means for practitioners, and where IFPA continues to advocate on your behalf.
SG reaches 12%
From 1 July 2025, the superannuation guarantee (SG) reached its legislated ceiling of 12%, completing the long-planned phased increase.
The steady uplift in SG has been a key driver of growth in the superannuation system. Since SG was introduced in the early 1990s, total super assets have expanded from around $148 billion to approximately $4.5 trillion as at the September 2025 quarter. Total super assets now exceed the total market capitalisation of all companies listed on the Australian Securities Exchange (ASX) which was approximately $3.23 trillion as of November 2025. This milestone highlights the scale, maturity and economic significance of Australia’s superannuation system.
IFPA comment
Reaching 12% is a significant achievement for Australia’s superannuation system and reflects decades of bipartisan commitment to improving retirement outcomes. While higher compulsory contributions support long-term savings, it is equally important that the system remains stable, sustainable and predictable. Ongoing policy certainty will be critical to maintaining confidence and ensuring Australians continue to engage with and invest in superannuation over the long term.
Payday super becomes law
Payday super is now law and will commence from 1 July 2026. The legislation received Royal Assent in November 2025.
Key features include:
- SG moves from quarterly to payday based payments.
- Contributions must be received by the employee’s super fund within seven business days (extended to 20 business days in limited cases).
- SG statements will be replaced with voluntary disclosure statements.
- New penalties apply for late payments.
The ATO has released PCG 2025/D5 outlining its first year compliance approach. Employers will be placed into low, medium or high-risk zones based on whether they attempt to pay SG in full and on time, and whether any problems (like rejected contributions or system delays) are promptly corrected. High-risk employers should expect active ATO investigation.
With less than seven months until commencement, implementation is now the key challenge. This is the biggest operational shift in superannuation in over 30 years and will significantly impact payroll systems, cash-flow management and compliance processes for small business owners.
IFPA comment
Overall, payday super is a positive reform in principle and should reduce unpaid super. However, IFPA strongly advocated for clearer safe-harbours for third-party delays and a delayed or staged start for micro-businesses, proposals that were ultimately not adopted.
The focus now shifts to readiness. Advisers and accountants will be central to helping employers prepare, audit systems, manage cash-flow impacts and monitor more frequent SG obligations.
Overall, we believe payday super is positive in principle and should reduce unpaid super.
Division 296 tax
In October, the Treasurer announced significant improvements to the proposed Division 296 tax.
Key changes include:
- The tax will only apply to future actual earnings, not unrealised gains as originally proposed.
- Superannuation funds will calculate earnings for affected members.
- The $3 million threshold will be indexed to the consumer price index (CPI) in $150,000 increments, keeping pace with the transfer balance cap (TBC).
- An additional threshold of $10 million will be introduced, with earnings above this level taxed at 40%. This will also be CPI-indexed in $500,000 increments.
- The start date is deferred to 1 July 2026, with the first assessments expected in 2027/28 based on 30 June 2027 total super balances (TSBs).
- The tax will also apply to defined benefit pensions, ensuring consistent treatment across super structures.
This creates a tiered tax structure:
- Up to $3m: 15% tax
- $3m – $10m: 30% effective tax
- Above $10m: 40% effective tax
The ATO will continue to administer and calculate the Division 296 tax liability, however super funds will be responsible for calculating the realised earnings for each member based on taxable income concepts and report this information back to the ATO.
The government will introduce legislation to implement these changes ahead of the 1 July 2026 start date, following further consultation with industry.
IFPA comment
These changes are a clear improvement, but important design and operational details remain unclear. IFPA continues to engage with Treasury and the Government and has outlined outstanding concerns in our November/December 2025 Outlook Magazine (Issue 39).
Further information regarding this proposal can also be found in our member update and media release.
ATO finalises NALI updates
The ATO finalised updates to LCR 2021/2 and TR 2010/1 in October, reflecting legislative changes to the non-arm’s length income (NALI) rules.
In short, LCR 2021/2 confirms:
- SMSF taxable income is split into a low-tax component (15%) and a non-arm’s length component (NALC) (taxed at 45%).
- A fund’s NALC is capped at the lesser of:
- The sum of the calculated NALI amount, that is:
- Any NALI amount (other than from a general expense shortfall) less any deductions attributable to that income, and
- Any NALI as a result of a general expense shortfall (calculated using the two-times approach), and
- The fund’s taxable income for the year less any assessable contributions plus any deductions attributable to those contributions.
- The sum of the calculated NALI amount, that is:
- In simple terms, if a fund’s NALI is greater than its taxable income, then the fund’s taxable income will be taxed at 45% as the lesser of the two apply. Note, the NALC cap applies to both specific and general expenses.
- General expense shortfalls are assessed using the “two-times” approach.
- Specific expense breaches remain harsh – all income from the affected asset is taxed at 45%.
- Large APRA-regulated funds are excluded from NALE rules, but other NALI provisions still apply.
The ATO also clarified in TR 2010/1 that:
- In-specie contributions must be recorded at market value in the fund’s accounts and member records.
- When an asset is purchased under a sale contract for less than its market value, the discount is treated as NALE rather than a contribution. As a result, all income derived from the asset (ie, rent, capital gains on disposal, etc) is taxed as NALI at 45%.
Further information can be found in our previous weekly update here.
Legacy pensions and asset-test certainty
In September, two determinations provided long-awaited clarity for legacy lifetime income streams affected by the legacy pension amnesty.
The issue arose because the sheer option to commute a legacy pension, introduced from 7 December 2024, technically caused some otherwise asset-test-exempt pensions to lose that exemption, even where no commutation occurred.
The determinations confirm that certain legacy pensions that were 50% or 100% asset-test exempt immediately before 7 December 2024 will retain their exemption, provided the only reason for failing the rules is the amnesty commutation option.
Any debts that arose during this period may also be waived under the Social Security (Waiver of Debts – Legacy Product Conversions) Specification 2025, delivering welcome peace of mind for affected pensioners.
CSLR levy pressures continue
The compensation scheme of last resort (CSLR) levy continues to escalate, driven by large-scale firm and product failures.
For 2025/26:
- The levy was revised down from $70.11 million to $67.3 million for the personal financial advice sector. As this amount exceeds the $20 million sub-sector cap, any funding beyond the $20 million sub-sector cap must be sought through a special levy.
- As a result, a $47.3 million special levy will apply due to the collapse of the Shield and First Guardian Master Funds.
- Financial Services Minister, Dr Daniel Mulino, announced costs will be spread across 23 retail-facing sub-sectors of the financial services industry, rather than primarily burdening financial advisers. That said, advisers will still bear around 22% of the additional amount, or around $10.4 million.
IFPA comment
As highlighted in our media release, while we welcome confirmation that SMSFs are excluded from the CSLR levy, we remain concerned about proposals to extend the levy to SMSFs from 2027.
Treasury will release a discussion paper in February 2026 on longer-term CSLR funding, including contributions from parent companies and high-risk products. IFPA will participate actively in that consultation and will build on its original position to Treasury. Our submission to the CSLR Post Implementation Review, including eight key recommendations to improve the scheme’s operation and funding can be accessed here.
Delivering better financial outcomes (DBFO) update
Treasury released exposure draft legislation for Tranche Two of the Delivering Better Financial Outcomes (DBFO) reforms in March 2025.
The proposed “Tranche 2A” measures focus on modernising advice delivery and improving member engagement, including:
- Replacing Statements of Advice with a more fit-for-purpose advice record.
- Allowing superannuation funds to collectively charge members for financial advice.
- Enabling superannuation funds to proactively prompt members at key life stages.
Further reform is still required. Key elements including the proposed new class of adviser and changes to the best interests duty remain under development and are intended to be consulted on and introduced as part of a subsequent legislative package (Tranche 2B).
The Assistant Treasurer and Minister for Financial Services, Dr Daniel Mulino, has described DBFO as a “real priority” while acknowledging its complexity. Earlier this year, he indicated that further legislation (Tranche 2B) would be released as soon as the remaining details are settled. At this stage, that draft has yet to be released, and the timing remains uncertain.
IFPA comment
IFPA supports the intent of DBFO but we are concerned that the draft legislation does not sufficiently simplify advice delivery and, in some areas, risks adding complexity.
Our submission highlights the need for bolder reform to genuinely improve access to quality advice.
Looking ahead to 2026
In 2026, we expect further progress on Division 296 legislation, CSLR funding reform, and the remaining DBFO measures.
And lastly, ahead of the 2026/27 Federal Budget, IFPA is preparing its Pre-Budget Submission and invites members to submit suggestions that the advocacy team can take to government. If you have any feedback or issues that are emerging in your practice, please let us know by emailing us at [email protected] by 21 January 2026.
IFPA holiday closure
IFPA will close at 5pm on Friday 19 December 2025 and reopen on Monday 19 January 2026.
Thank you for your support throughout the year. We wish you and your families a Merry Christmas and a safe and happy New Year.