Division 296 started on 1 July. Here is what changed on the ground for SMSF trustees

The redesigned Division 296 tax commenced on 1 July 2026. If your fund holds a member balance anywhere near $3 million, the rules that apply to you changed nine days ago, and some of what you read about them last year is now wrong in useful ways.

The 2023 version of this tax died. The version that passed in March taxes realised earnings, not paper gains. That single change fixed the loudest objection to the original design, and it also changed what a trustee needs to keep track of. Under the old proposal you watched your balance. Under the law as enacted you watch three numbers.

The three numbers

Your total super balance at 30 June 2027. For this first year, that is the only test date. Your opening balance on 1 July 2026 is disregarded, so a member sitting at $3.1 million today who draws down to $2.9 million by next June is not in scope for year one. From 2027-28 the test becomes the higher of your opening and closing balance, which is a meaningfully stricter net.

Your share of the fund's realised earnings. The tax applies at 15 percent to earnings attributable to the balance between $3 million and $10 million, and at 25 percent above $10 million, in proportion to how much of your balance sits in each band. Earnings here means the fund's taxable income with adjustments, worked out on ordinary tax principles. Realised capital gains count. Unrealised growth does not.

The proportion itself. A member with $4.2 million and $260,000 of realised earnings has two sevenths of their balance above the threshold. Two sevenths of the earnings, about $74,300, is taxable at 15 percent. The estimate lands near $11,100. Run your own figures through our free estimator at smsfcore.com/div296. No signup, and the arithmetic is printed on the page.

The deadline claim that is wrong

Through May and June, a steady stream of articles told trustees they had to decide on the cost-base reset election before 30 June 2026. That date matters, but not the way those articles said.

The election lets a fund reset the cost base of every CGT asset to its market value as at 30 June 2026, for Division 296 purposes only, so that gains accrued before the regime started are not swept into it. The valuation is taken at 30 June. The election itself is lodged with the fund's 2026-27 annual return, which for most SMSFs means well into 2027. If your fund did nothing in June, you have not missed anything. What you need from June is defensible market valuations as at that date, and most funds obtain those for their accounts anyway.

Two features of the election deserve respect. It covers every asset or none, with no cherry-picking. And it cannot be revoked. A fund with large unrealised gains and a member likely to stay above $3 million probably wants the numbers in front of them before deciding either way. That is a conversation for your accountant, and the regulations give the actuarial profession a role too: for funds with more than one member, each member's share of fund earnings comes from an actuarial determination, similar to the certificate many funds already obtain for pension income.

What we built for it

SMSF Core now includes a Division 296 tracker alongside the franking module. You record each member's balance and, when you have one, an earnings estimate. The tracker shows the distance to the thresholds, an estimate under the two-tier rules, and a place to record what your fund decided about the election, including that it has not decided yet, which is a perfectly good state to be in until your 2026-27 return is due.

Every figure cites its source, and nothing in the tracker is an assessment. The ATO issues those to the member, not the fund, and a member who receives one can choose to have it paid from their super interest.

There is a sample fund at app.smsfcore.com/demo if you want to see the tracker with data already in it, and the free Division 296 estimator at smsfcore.com/div296 needs no signup at all.

SMSF Core is an information tool, not a licensed financial service. Talk to a licensed adviser or your accountant about your own position.