Division 296 and the 30 June 2026 valuation.

What Division 296 does

Division 296 imposes an additional tax on the proportion of superannuation earnings attributable to an individual’s total superannuation balance above $3 million, with a further increment applying above $10 million. Both thresholds are indexed. It is assessed to the individual, not to the fund, and the ATO issues the assessment directly.

The version that became law differs materially from the original 2023 proposal. It does not tax unrealised gains: earnings are calculated on a realised basis. That change is what makes the transitional adjustment necessary, and it is where valuers come in.

The transitional cost base reset

Because the tax applies only to earnings from 1 July 2026 onward, the legislation allows an SMSF to elect to adjust the cost base of the CGT assets it held on 30 June 2026 to the market value of those assets on that day. Gains that accrued before commencement are then excluded from the Division 296 calculation when the asset is eventually sold.

For a fund holding property that has appreciated over many years, this election can be worth a great deal. And it has a precondition: somebody has to establish the market value of that property as at 30 June 2026.

The date has passed, so the valuation is retrospective

A valuation effective 30 June 2026 commissioned now is a retrospective valuation. That is entirely normal, entirely acceptable, and exactly the work this practice does — but it is worth understanding what it means practically.

The effective date is fixed at 30 June 2026 and the report will say so. Our inspection happens now, and the report states the inspection date separately. Comparable sales evidence is drawn from around 30 June 2026 rather than from today. The closer to that date we are instructed, the tighter the evidence set and the stronger the report.

• Effective date: 30 June 2026, stated explicitly on the report.
• Comparable sales drawn from the period around that date, with full addresses.
• Independent of the fund, its members and its related parties.
• Prepared by a Certified Practising Valuer, as the ATO expects.
• Delivered to the trustee, the accountant and the auditor.

Which trustees should be acting

The election is relevant well below the $3 million threshold, because a balance below it today may exceed it before the property is sold — and the election is measured once, at 30 June 2026, and cannot be recreated later.

The election is lodged with the fund’s return, so there is a deadline attached. Confirm it and the merits of electing with the fund’s accountant or adviser; we can only supply the valuation the election depends on. Because this is recent legislation still being bedded down in regulations, verify the current mechanics before acting.

Questions we are asked about this

Keep reading

Sources

• Verifying the market value of fund assets — Australian Taxation Office — what SMSF auditors must obtain
• Market valuation for tax purposes — Australian Taxation Office — the eight valuation fundamentals
• Australian Property Institute — Professional Practice Standards and the CPV designation

This page is general information about how valuations are used for tax purposes. It is not tax advice. Your accountant or tax agent should confirm which provision applies to your circumstances.