You’ve probably heard something about Division 296 tax by now, even if only in passing. It’s been through several versions over the past couple of years, but the rules are now settled and the tax started from 1 July 2026. Here’s the quick version, without the jargon.
What is it?
Division 296 is an additional tax on earnings attributable to total super balances over $3 million (taxed at 15%) and over $10 million (taxed at a higher rate again). The original proposal would have taxed unrealised gains, meaning you could be taxed on a paper profit before you’d actually sold anything. That drew significant criticism, and understandably so. The version that ultimately passed only taxes realised earnings, things like rent, interest, dividends and gains that have actually been locked in through a sale.
So why does 30 June 2026 matter?
This is the part most people miss. As part of the transition to the new rules, SMSFs have the option to reset the cost base of their assets to market value as at 30 June 2026. In practical terms, that means the value of an asset on that date can become the new starting point for calculating capital gains tax when it’s eventually sold.
If your SMSF holds property, either directly or through a related structure, that reset could translate into a real tax saving down the track. But it only works if you can demonstrate what the property was actually worth on that date. A rates notice or an agent’s appraisal won’t be sufficient if the position is ever reviewed by the ATO.
This is where a proper valuation earns its keep
A capital gains tax valuation, prepared by a qualified valuer as at 30 June 2026, gives you a defensible, evidence-based figure. It isn’t a desktop estimate. It draws on comparable sales evidence and the specific characteristics of the property, and is prepared to a standard that will hold up under scrutiny if the position is ever questioned.
We’re already seeing SMSF trustees and their accountants trying to arrange these valuations which is preferable. Retrospective assessments into the future are also possible however can potentially lead to scrutiny by the ATO, which is less than ideal. A valuation completed close to the actual date, supported by contemporaneous evidence, will always be more robust than one reconstructed months or years later based on assumptions about what the market looked like at the time.
What if you want to wait till later and do a retrospective valuation?
If you arent ready to get a valuation, a retrospective assessment is still an option. If you do want to make it as robust as possible, make sure you do the following:
- Get a third party to take notes of the property’s accommodation and condition at the date of 1 July 2026,
- Get a floorplan drawn up,
- Keep detailed information of the rental and outgoings as at the same date; and,
- Take date stamped photos of the property (a picture tells a thousand words)
This can be as simple as keeping good records and getting your managing agent to undertake an out of routine periodic inspection. This info would be then relied upon to complete the valuation at a later date. Be warned however, there is an element of double handling in the retrospective approach and longer you go back in time, the more research that is requried by the valuer to complete. This typically leads to more time and cost incurred to complete the same task. For this reason, the closer as possible to the date, the better (for everyone).
If you hold property in an SMSF and haven’t yet arranged a 30 June 2026 valuation or condition report, it isn’t too late. The sooner it’s done properly, the better placed you’ll be. Get in touch with the team at Titan and we can take care of it for you.