As we moved through the 2025 financial year, there have been a number of developments in the self-managed superannuation fund (SMSF) space worth noting.
This month, we focus on three key areas: the outcome of the 2025 Federal Election, the 2025–26 Federal Budget, and the latest updates to SMSF annual returns.
Federal Election: What It Means for Superannuation
The May 2025 election saw the Federal Labor Party return to government with a strengthened majority. Labor increased its hold in the House of Representatives from 77 to 94 seats and made gains in the Senate, holding 29 seats compared to 25 previously. This enhanced parliamentary position gives the government the momentum to pursue broader superannuation reforms.
Central to Labor’s proposed changes is the introduction of a 15% tax on a proportion of earnings (including unrealised gains) from super balances exceeding $3 million. While the government asserts this measure targets only a small proportion of high-balance accounts, some critics argue it may affect more individuals over time as inflation and investment growth push balances upward. Notably, polling indicates strong support for this policy among younger Australians and women, suggesting a shift toward more equitable views on superannuation taxation.
Looking ahead, Assistant Treasurer Daniel Mulino has flagged the potential for further changes to the $4.2 trillion super system, highlighting a focus on sustainability, fairness, and fiscal responsibility.
Federal Budget 2025–26: A Focus on Affordability and Future Growth
Treasurer Dr Jim Chalmers delivered the 2025–26 Federal Budget on 25 March with a message centred on “helping Australians now and building for the future.” Key initiatives included assistance with cost-of-living pressures, investments in healthcare, housing accessibility, education, and economic resilience.
While the budget included broader personal tax cuts, SMSF trustees should remain attentive to policy changes targeting high super balances and new incentives for property-related investments.
2025 SMSF Annual Return: Key Changes
The Australian Taxation Office (ATO) has released the updated SMSF annual return for the 2025 financial year, with three major updates:
- Legacy Retirement Products and Reserves:
From 7 December 2024, legacy products like Lifetime Complying Pensions (LTCs) and Market Linked Pensions (MLPs or TAPs) can now be commuted back to accumulation phase. This offers more flexibility for trustees and may simplify retirement strategies. The treatment of reserves has also changed depending on whether actions occurred before or after this date. - Housing Tax Incentives – Build-to-Rent:
New tax incentives have been introduced for SMSFs investing in eligible build-to-rent developments. Benefits include a 4% capital works deduction and a concessional 15% withholding tax on certain payments. To qualify, developments must meet strict criteria, including a minimum of 50 dwellings, 15-year ownership, and provision of affordable housing. - Reduction in Cheque Use:
The ATO continues to phase out the use of cheques for tax refunds, pushing SMSFs toward digital banking solutions.
Final Thoughts
Labor’s strengthened mandate may signal continued reform in the superannuation space. SMSF trustees are encouraged to stay informed and seek advice on how these developments could impact their strategies.
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