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With today's release of the December quarter CPI figures, FirstTech calculates that the general transfer balance cap (currently $2 million) will increase to $2.1 million on 1 July 2026. 

This increase means that clients commencing their first retirement phase income stream in 2026–27 will start with a personal transfer balance cap of $2.1 million.

Clients who already have a personal transfer balance cap that they have not fully utilised at any time in the past will see their cap increase on 1 July 2026 by less than the general cap increase of $100,000, due to (up to 4 rounds of) proportional indexation.

Further information about the general and personal transfer balance cap can be found in section 21 of the FirstTech Super Guide.

The increase in the general transfer balance cap also impacts other super rules and concessions in 2026–27 as follows:

• A member’s total super balance at 30 June 2026 must be less than $2.1 million to access the standard non-concessional contributions cap.  

• A member’s total super balance at 30 June 2026 must be less than $2.1 million to access the Government co-contribution.

• For a client to receive a spouse contribution tax offset, the receiving spouse’s total super balance at 30 June 2026 must be less than $2.1 million.

• The defined benefit income cap (currently $125,000) will increase to $131,250.

Concessional contributions cap also likely to increase on 1 July 2026 - impact on non-concessional caps and thresholds

The calculation of the basic concessional contributions cap (currently $30,000) for 2026–27 depends on average weekly ordinary time earnings (AWOTE) data for the December 2025 quarter, which becomes available in late February.  However, based on the most recent available AWOTE data, the basic concessional contributions cap is extremely likely to increase to $32,500 on 1 July 2026.

For more information including the non-concessional cap and total super balance thresholds, as well as the increase to the SG maximum contribution base, see the FirstTech Newsflash

The ATO has released PCG 2026/1 setting out its compliance approach for the first year of Payday Super’s operation from 1 July 2026 to 30 June 2027.

The ATO has stated that it will prioritise its compliance resources toward the highest‑risk employers who have any individual final SG shortfall greater than nil for one or more employees for the (qualifying earnings) QE day occurring 28 days after the end of the quarter in which the qualifying earnings were paid. 

Where an employer has attempted to pay the required contributions under Payday Super but issues arise that delay payment, the employer’s risk zone depends on whether and how quickly they resolve the issue. 

PCG 2026/1 outlines three risk zones for employers:

• Low: An employer will be in the low-risk zone where all of the following have been met:
  • the employer attempted to ensure that all of their individual base SG shortfalls in relation to their employees were nil for the QE day, by making on-time contributions equal to or exceeding the individual SG amount
  • some or all of the eligible contributions were not received by the relevant fund (and allocable for the benefit of the employee) on time
  • these eligible contributions are received by the relevant funds and allocable for the benefit of the employees as soon as reasonably practicable, resulting in the employer having individual final SG shortfalls of nil for all employees for the QE day at that time.

• Medium: An employer will be in the medium-risk zone where the employer does not meet the criteria to be in the low-risk zone, but the individual final SG shortfalls for all their employees are nil by the end of 28 days after the end of the quarter in which the qualifying earnings were paid.

• High: An employer will be in the high-risk zone where the employer does not meet the requirements to be in the low-risk or medium-risk zone.  An employer will also be in the high-risk zone if they have one or more individual final SG shortfalls greater than nil for their employees after 28 days following the end of the quarter in which the qualifying earnings were paid.

The ATO also noted that employers may move between risk zones throughout the year.

The ATO also released Payday Super checklist to help employers prepare for the new rules starting on 1 July 2026.

The ATO has online information and resources about Payday super to help employers stay informed on the rollout. These resources also support employers prepare for the closure of the ATO’s Small Business Superannuation Clearing House on 1 July 2026.

The ATO has released Draft Taxation Determination TD 2026/D1 for consultation, closing 27 February 2026. The draft taxation determination clarifies when an individual has a ‘right to occupy a dwelling under the deceased’s will’, which is relevant in determining whether the beneficiary or trustee of the deceased estate is entitled to the CGT main residence exemption under item 2(b) of column 3 of the table in subsection 118-195(1) of the Income Tax Assessment Act 1997 (ITAA 1997). 

The ATO stated an individual will only have a right to occupy a dwelling under the deceased’s will if this right was granted in accordance with the terms of the will itself without the aid or intervention of any subsequent or intermediate transaction.  Similarly, an individual will not be considered to have a right to occupy a dwelling under the deceased’s will if that right was granted under a separate agreement, such as a deed of arrangement entered into between the beneficiaries and executor or trustee of a deceased estate. 

The Draft Taxation Determination provides the following 5 scenarios 

1. Right to occupy arising under separate agreement
2. Right to occupy arising under exercise of trustee’s broad discretion
3. Right to occupy the dwelling for a limited period
4. Right to occupy the dwelling as a result of court order
5. Testamentary trust annexed to will

Further guidance from the ATO is expected after the consultation period.