Division 296 and SMSF asset values

What is Division 296?

It is an additional tax on super earnings for individuals with large balances, and the ATO says it is now law and applies from the 2026-27 financial year. From 1 July 2026, a member whose total super balance (TSB) is above the large super balance threshold, set at $3 million for 2026-27, pays an additional 15% on the proportion of earnings relating to the amount above it. Above the very large threshold, set at $10 million for 2026-27, a further 10% applies to the proportion of earnings above that.

The ATO's page on Division 296 for SMSFs adds that both thresholds may be indexed in future, and that for 2026-27 the test is the member's TSB at the end of the income year. The tax is assessed to the individual, but the SMSF trustees report on in-scope members: the fund works out its Division 296 fund earnings, an adjusted amount of fund taxable income, and a portion is attributed to each member. Subject to exceptions, the ATO says an actuary will need to be engaged. Limited recourse borrowing amounts are disregarded when working out a member's TSB for Division 296.

This article covers the valuation side only. We do not calculate Division 296 tax, balances or earnings, and we do not give tax advice.

Where do SMSF asset values come in?

In three places, according to the ATO's own pages.

The ATO's valuation guide explains the first. The audit notice explains the second. The third is covered below.

Why do supportable values matter for members near $3 million?

Because the threshold is a fixed line, and the value of one large asset can decide which side of it a member's balance falls on. The ATO says accurate reporting supports Division 296 calculations.

Unlisted shares and units have no quoted price, so they are the hardest to pin down. As reported, they are also among the assets the ATO's campaign looked at where values stayed unchanged for years. A supportable value can be lower than the carrying value as well as higher. The point is that it can be explained, not that it moves in any direction.

Which holdings need the most care?

Holdings with no quoted price, and holdings that have carried the same value for years. As reported, the ATO's valuation campaign looked at funds reporting property, unlisted companies and unlisted trusts at the same value for three consecutive years. Shares in a private company and units in a private unit trust fit that description, because their value depends on the entity's assets and liabilities rather than a price.

We value those shares and units. Property held directly by your fund: we are not taking direct property valuations yet. If a trust or company owns the property, we value the units or shares using a property valuation you already hold.

What is the CGT adjustment election, and why does it need a 30 June 2026 value?

The ATO says an SMSF can elect to adjust the cost base or reduced cost base of its CGT assets to their market value at the end of 30 June 2026, to recognise value built up before Division 296 began. The election applies only when working out the fund's Division 296 fund earnings. It applies to all CGT assets the fund held at the end of 30 June 2026, cannot be revoked and must be made by the due date of the 2026-27 annual return. Members do not need to be over the large super balance threshold.

The ATO says it is generally available only for assets the fund holds or owns directly, not those held indirectly other than through a custodian or look-through arrangement. As we read that, shares in a company and units in a unit trust are assets the fund owns itself, and the assets inside the company or trust are not. The ATO's page does not use unlisted shares as an example, so confirm it with your adviser.

The ATO's page, last updated 29 June 2026, says the election must be in the approved form, which it said would be provided in due course. Whether to make it is for the trustees and their tax adviser. A fund considering it needs a supportable market value for each unlisted holding at 30 June 2026.

What can trustees gather now?

Evidence, and questions for their advisers. Nothing here is advice on what a fund should do:

1. List each unlisted holding with its last supported value, the date and what supported it.
2. Collect the entity's financial statements, asset list and any property valuations for each 30 June.
3. Ask your tax adviser whether the CGT adjustment election is relevant, and whether you hold a supportable 30 June 2026 value for each asset it would cover.
4. Ask your actuary or adviser what the fund must report for members above the threshold.
5. Tell the auditor early which holdings rely on a valuation, and give them the documents they request.

What do auditors check under Division 296?

The same things as before. The ATO says Division 296 does not change auditors' obligations, and that accurate reporting and existing audit requirements remain important because they support Division 296 calculations. Auditors check two things: that sufficient and appropriate evidence supports each asset's reported market value (SISR regulation 8.02B), and that investment returns are allocated to members on a fair and reasonable basis (regulation 5.03).

If the evidence is insufficient, the auditor must consider modifying the independent auditor's report and lodging an auditor contravention report where the criteria are met. For the evidence the ATO lists for unlisted assets, see our page for accountants and auditors.

What can a valuation do, and what can it not?

It can give a supportable market value for an unlisted holding at a stated date. A suitably qualified business valuer at Valuation Group, independent of your fund, values the shares or units, states the method, data and assumptions, and writes the report to be used as audit evidence.

• It does not calculate total super balances, Division 296 fund earnings or tax. The ATO says an actuary is generally needed to attribute earnings.
• It does not advise whether to make the CGT adjustment election or how to manage a member's balance.
• It does not settle what an auditor will accept. The auditor decides.

Investment entity (a company or unit trust holding property, cash or listed investments): $995 + GST. Trading businesses are priced by turnover on the pricing page. Each additional valuation date, such as 30 June 2026 and 30 June 2027 for the same holding: $495 + GST. We confirm the fee in writing before we start. No hourly billing. See also Division 296 valuations.