Division 296 and SMSFs with unlisted assets
The new Division 296 super tax will apply from 1 July 2026, increasing tax on earnings for individuals with super balances above $3 million.
While the changes are broadly targeted at high-balance members, they create additional complexity for SMSF clients holding unlisted assets such as property, private companies and unit trusts.
Key considerations include:
- Valuation challenges, as unlisted assets require reliable market values each year (the unlisted entity to be audited by an independent auditor to have the assets valued at market value and ensure all assets and liabilities have been brought onto the balance Sheet)
- Higher compliance costs, including potential actuarial requirements
- Structural issues, particularly where assets are held through related trusts or private companies, which may trigger additional compliance rules (such as in-house asset provisions or non-arm’s length income rules) and limit flexibility in managing tax outcomes
- Liquidity pressures, where tax liabilities arise but assets are not easily sold
A one-off cost base reset at 30 June 2026 provides some relief, but it is limited and may not apply to all structures.
What this means for clients:
We recommend reviewing SMSF structures, valuations and long-term strategy well before 30 June 2026 to manage the potential impact. In particular, holding unlisted assets within an SMSF is becoming increasingly risky, given the added valuation uncertainty, compliance burden and potential liquidity constraints under Division 296.
Author
Anitta Rodrigues