Superannuation is still one of the best legal tax shelters we have in Australia. The problem is, most small business owners either ignore it completely or make expensive mistakes because the rules keep changing. Let’s cut through the complexity and focus on what actually works for Australian business owners in 2025.
The Big Super Changes This Year
Your Retirement Account Just Got Bigger
From 1 July 2025, the amount you can transfer into a tax-free pension account increases from $1.9 million to $2 million. This is the first increase since 2021, so it’s a genuine opportunity.
Here’s why timing matters:
- Start your pension in June 2025: Your limit is $1.9 million
- Wait until July 2025: Your limit is $2 million (that’s an extra $100,000 tax-free)
Already taking a pension? The increase only applies to any unused room you have left. Check your myGov account to see exactly where you stand.
Super Guarantee Rate Jumps to 12%
From 1 July 2025, you’ll need to pay 12% super instead of 11.5% for all your employees. This applies to any wages paid from 1 July onwards, even if some of the work was done in June.
What this costs you:
- Employee on $60,000: Extra $300 per year
- Employee on $80,000: Extra $400 per year
- Make sure your payroll software is updated before 1 July
The Government Starts Paying Super on Parental Leave
This is new for 2025 – if someone takes government-paid parental leave, the ATO will automatically contribute super at the SG rate (12% from July). It gets paid as a lump sum after the financial year ends, with interest included.
How Business Owners Can Use Super Smartly
1. Before-Tax Contributions (The $30,000 Annual Limit)
Every year, you can put $30,000 into super before tax. This includes what your employer puts in, any salary sacrifice, and any personal contributions you claim as a tax deduction.
The unused contribution trick: If your total super balance was under $500,000 on 30 June 2024, you might be able to use unused contribution room from the last five years.
Example:
- You’ve been under-contributing by $8,000 each year for five years
- That’s $40,000 you could put into super this year and still claim as a tax deduction
- At the top tax rate, that could save you $18,000 in tax
Tax savings breakdown:
- Super fund pays maximum 15% tax on contributions
- If you’re paying 32.5% or 37% personal tax, that’s a genuine saving
- High earners (over $250,000) pay 30% in super – still better than 45% personal tax
2. Personal Deductible Contributions
If you’re not an employee (or you want to top up what your employer puts in), you can make personal contributions and claim them as a tax deduction.
The rules:
- Must be under 75 years old
- Need to fill out a “notice of intent” form with your super fund before you lodge your tax return
- If you’re 67-74, you need to work at least 40 hours in any 30-day period during the year
Strategic timing for Albury-Wodonga business owners: Many of our local clients are farmers, contractors, or seasonal businesses with variable income. If you’ve had a good year, making a super contribution before 30 June can smooth out your tax over multiple years.
Real example:
- Contractor earns $120,000 in a bumper year
- Puts $20,000 into super and claims the deduction
- Saves $6,500 in tax (32.5% bracket)
- That money grows in super at maximum 15% tax instead of their 32.5% personal rate
3. Spouse Super Contributions
This is a ripper strategy that heaps of people miss. If your partner earns less than $37,000, you can put up to $3,000 into their super and get up to $540 back as a tax offset.
Perfect for:
- Farming families where one partner works off-farm
- Retail businesses where one spouse works part-time
- Any situation where there’s an income imbalance
It’s basically free money from the government – you’d be mad not to take it if you’re eligible.
4. Non-Concessional (After-Tax) Contributions
2025 Annual Cap: $120,000
Bring-Forward Rule:
- Under 65: Can contribute up to $360,000 (3 years’ worth)
- Ages 65-74: Annual cap only ($120,000)
- Must meet work test if aged 67-74
Trigger Warning: If your total super balance exceeds $1.9 million on 30 June 2024, your non-concessional cap is $0.
Business Owner Super Strategies
Self-Managed Super Fund (SMSF) Considerations
When SMSFs Make Sense:
- Super balances over $200,000-$300,000
- Want greater investment control
- Business property investment opportunities
- Complex family situations
2025 SMSF Updates:
- PAYG instalments increased by 4% GDP adjustment factor
- Can vary instalments if expected liability differs
- Quarterly TBAR reporting continues (due 28 April for March quarter)
Super and Business Property
Limited Recourse Borrowing Arrangements (LRBAs):
- SMSF can borrow to purchase business property
- Potential rental income stream
- Arm’s length terms required
- Professional advice essential
Related Party Transactions:
- Market valuation requirements
- Arm’s length dealing obligations
- Documentation critical for compliance
Small Business CGT Concessions and Super
CGT Cap Election
If you’re selling business assets and using small business CGT concessions:
CGT Cap Election Opportunity:
- Defer up to $500,000 of capital gain
- Must contribute deferred amount to super within 2 years
- Counts as non-concessional contribution
- Can exceed normal contribution caps
Example: Sell business property with $300,000 capital gain:
- Make CGT cap election
- Contribute $300,000 to super over 2 years
- Gain becomes tax-free in super environment
Advanced Super Strategies
1. Contribution Splitting
- Split up to 85% of concessional contributions with spouse
- Useful for balancing super balances
- Must be made in following financial year
- Can accelerate spouse’s access to super
2. Transition to Retirement (TTR)
For Ages 60-67:
- Access super while still working
- Maximum 10% per annum withdrawal
- Can be tax-free from age 60
- Useful for salary sacrifice optimisation
3. Re-contribution Strategies
Tax-Free Withdrawal and Re-contribution:
- Withdraw tax-free component (if over 60)
- Re-contribute as non-concessional
- Increases tax-free proportion
- Useful before starting pensions
Succession Planning and Super
Business Succession Through Super
SMSF Business Succession:
- Transfer business interests to next generation through super
- Utilise reversionary pension options
- Consider binding death benefit nominations
- Complex but powerful strategy
Estate Planning Integration
Key Considerations:
- Binding vs non-binding death benefit nominations
- Dependant vs non-dependant beneficiaries
- Tax implications for beneficiaries
- Regular review of nominations
ATO Compliance and Super
Common SMSF Compliance Issues
ATO Focus Areas:
- In-house asset rules (max 5% of fund assets)
- Arm’s length dealings with related parties
- Member benefits not preserved when required
- Accurate transfer balance account reporting
Record-Keeping Requirements
Essential Records:
- Investment decisions and rationale
- Market valuations for related party transactions
- Member contribution records
- Annual operating statements
Payday Super – Coming July 2026
Major Reform Ahead:
- Employers must pay SG within 7 days of pay day
- Current quarterly system changes to payday system
- Small Business Clearing House to be retired
- New penalty regime introduced
What to Do Now:
- Review current super payment processes
- Consider impact on cash flow
- Prepare for system changes
Year-End Super Checklist
For Employers:
- Ensure March quarter SG paid by 28 April 2025
- Confirm all employee details are current
- Prepare for 12% SG rate from 1 July 2025
- Check SuperStream compliance
For Business Owners:
- Calculate available contribution room
- Consider personal deductible contributions
- Review spouse contribution opportunities
- Assess SMSF suitability
- Plan pension commencement timing
For SMSFs:
- Lodge quarterly TBAR if required
- Complete annual audit and return
- Review investment strategy
- Update member details and nominations
Common Super Mistakes to Avoid
- Missing Contribution Deadlines: 30 June for current year deductions
- Exceeding Contribution Caps: Penalties apply for excess contributions
- Work Test Non-Compliance: Critical for ages 67-74
- Poor Documentation: Especially for deductible contribution claims
- Ignoring Total Super Balance: Affects contribution eligibility
Professional Advice Essential
Superannuation is complex and the consequences of getting it wrong can be severe. With frequent law changes and individual circumstances varying greatly, professional advice isn’t just recommended – it’s essential.
Red Flags Requiring Professional Help:
- Total super balance over $1.5 million
- Multiple income sources
- Business ownership
- Planning major life changes
- International considerations
Next Steps:
- Calculate Your Position: Review current super balances and contribution room
- Assess Opportunities: Identify which strategies apply to your situation
- Take Action: Implement strategies before 30 June deadline
- Seek Advice: Consult professionals for complex situations
Ready to supercharge your super strategy?
Super rules are complex and change regularly. What works for one business owner might not work for another. The strategies above could save you thousands, but they need to be tailored to your specific situation.
Book your super planning session
Complete Tax Planning Series:
- ← Small Business Tax Strategies for 2025: Essential Planning Before June 30 – Start here for fundamental tax savings
- Superannuation Planning for Business Owners: 2025 Updates and Strategies ← You are here
- Family Business Tax Planning: Investment Property and Trust Strategies → – Advanced strategies for wealth building
- Advanced Business Structures: Tax Planning for Growing Businesses → – For established and growing businesses
- Why Smart Business Owners Never Skip Tax Planning → – Why tax planning is about more than tax
This information is general in nature and should not be considered as personal financial or superannuation advice. Superannuation rules are complex and change frequently. Always seek professional advice tailored to your specific circumstances.
Book In for your TAX PLANNING Session now
