Yearly Outlook 2026

2025 proved again to be a year of resilient global economic growth and strong returns for risk assets. However, it certainly didn’t feel that way in early April as we all grappled with what President Trump’s Liberation Day meant for economies and markets. As it turned out, however, the worst tariff scenarios were avoided as Trump walked back from initial tariff levels, and importantly there were strong tailwinds for the US and global economies. Interest rates continued to be cut as inflation stabilised, and record levels of capex were invested in AI and technology. Highly stimulatory fiscal US deficits were continued if not increased with the passing of the One Big Beautiful Bill (OBBB) by the US congress.

As we shift into 2026 one of the biggest challenges is thinking through where we are in the cycle, and how much risk and credence we should attach to the highly unconventional Trump administration.

Division 293 Tax

High income earners will be familiar with the somewhat dreaded ‘Division 293 tax’. However, Division 293 tax does not only apply to those people who derive substantial income from employment or self-employment. The additional tax bill can crop up as a result of taxable income from other sources.

Better Targeted Super Concessions (Div. 296 Tax) Update

After sustained industry pushback, the Government has reshaped its Better Targeted Superannuation Concessions (BTSC) policy to remove the controversial tax on unrealised gains. From 1 July 2026, BTSC will apply only to realised earnings, introduce a two-tier framework for very large balances, and index the $3m and $10m thresholds to CPI (aligned with Transfer Balance Cap movements). The ATO will continue to assess liabilities, while funds – including SMSFs – will need the capability to attribute realised earnings to in scope members on a fair and reasonable basis.

Deeming Rate Changes

After being frozen for five years, the Centrelink deeming rates recently rose on 20 September Deeming rates are used to work out income from financial assets, thereby providing administrative ease in the application of the income means test. The process assumes that certain financial assets earn a set rate of income, rather than considering what they really earn.

Using Carry Forward Concessional Contributions

Concessional super contributions (also known as before-tax contributions) include employer super guarantee (SG), salary sacrifice amounts and personal tax-deductible contributions. Concessional contributions are presently subject to a limit of $30,000 per financial year, taxable to the super fund at 15%. Prior to July 2018, concessional contributions were subject to a ‘use it or lose it’ scenario. However, unused concessional cap allowances began accruing from 1 July 2018 under the catch-up rules. These rules allow super fund members to carry forward any unused concessional contributions on a rolling five-year basis.

Spouse Contributions

A spouse contribution, when related to a contribution tax offset, is a way to boost a spouse’s super whilst managing tax. These contributions can also help address situations where one partner may have a lower super balance due to leave or reduced working hours.

End of Financial Year Checklist

The End of Financial Year (EOFY) is once again fast approaching – providing an opportunity to review your position ahead of the new year to come. Given the inevitable June end rush, as well as processing and cut-off times, we believe it prudent to consider important actions in advance of deadlines. The following is an outline of key planning strategies that may require review. However, this may not cover all EOFY planning requirements – please contact your adviser if you have a query as they can assist by way of facilitation with other advisers (such as your accountant).

General Transfer Balance Cap – Increase to $2 million

The maximum balance a superannuation member can move into the tax-free retirement (pension) phase is presently $1.9 million. This is due to a limit introduced in 2017 known as the Transfer Balance Cap (TBC). Indexation of the general TBC to $2 million will occur on 1 July 2025. We explore some of the implications below.

Testamentary Trusts

A testamentary trust is a type of trust that is created through a person’s Will and takes effect upon death. Depending on your financial circumstances, this structure can provide the beneficiaries certain advantages in addition to an inheritance

Transition to Retirement Income Streams (TRIS) 

Due to changes implemented in 2017 to limit the tax benefits of a transition to retirement pension, this strategy has received less attention in recent years. However, it remains a strategy that can assist those who have reached their ‘preservation age’ to have access to superannuation benefits without the requirement to leave a job or fully retire. Furthermore, a transition to retirement strategy can be used to manage ongoing cash flow, or to assist in executing extra tax-effective contributions to superannuation in the lead up to retirement.