Division 296

Division 296 and Your SMSF: A Trustee’s Guide to Getting the Valuations Right Before 30 June 2026

A plain-English guide from InteleK’s accredited valuation professionals. This article is general information about the valuation issues raised by Division 296 and is not tax, superannuation or financial advice — decisions about your fund should be made with your accountant or licensed financial adviser. Current as at July 2026; superannuation legislation and ATO guidance can change.

For most of the past decade, the market value of the assets inside a self-managed super fund was something trustees thought about once a year, ticked off at audit time, and largely forgot. Division 296 changes that. From 1 July 2026, the value of what your fund holds stops being a routine compliance figure and becomes a number that can directly determine how much extra tax you pay. That single shift is why this guide exists — and why, at InteleK, we think valuation has quietly become one of the most important conversations an SMSF trustee can have this financial year.

This guide is written the same way we write everything: for the intelligent business owner or trustee who is not a valuation specialist and does not want to become one, but who does want enough knowledge to make good decisions and to hire the right people. As the old adage goes, knowledge is power. Our aim is to give you enough of it that you walk into your next conversation with your accountant, adviser or valuer already knowing the right questions to ask.

It is divided into two parts. Part 1 explains what Division 296 is, why it is fundamentally a valuation story and not just a tax story, and the one-off opportunity it creates. Part 2 goes deeper into what a defensible valuation actually looks like, who should prepare it, and the timing realities you cannot afford to ignore.

Part 1 — What Division 296 Is and Why Valuation Sits at Its Core

Step 1 — Why Division 296 should be on your radar right now

The two bills implementing Division 296 passed through Parliament on 10 March 2026, and the measure applies from 1 July 2026. That means the first time your Total Superannuation Balance is tested for these purposes is 30 June 2026 — a date that, depending on when you are reading this, may be very close or may already have passed.

If there is a single theme that runs through everything we do at InteleK, it is this: the owners and trustees who come out ahead are proactive, not reactive. We see the same pattern again and again in business valuations. Someone leaves a decision until the moment it is forced on them — a sale, a dispute, a death in the family — and by then the window to shape the outcome has closed. Division 296 has exactly this character. The mechanics reward the trustee who prepares early and quietly punish the one who waits, because the preparation Division 296 demands is valuation work, and valuation work takes time that simply cannot be compressed in the final weeks before a deadline.

So the one-line thesis of this guide is straightforward. Division 296 turns the market value of your superannuation assets into a figure the ATO now cares about, and that makes obtaining defensible valuations your first move, not your last.

Step 2 — Division 296 in sixty seconds

Here is the mechanism in plain terms. From 1 July 2026, individuals whose Total Superannuation Balance exceeds $3 million become subject to an additional tax on the portion of their superannuation earnings that is attributable to the balance above that threshold. For balances between $3 million and $10 million, that additional tax is 15 per cent on the attributable earnings. For the portion of a balance above $10 million, the additional rate steps up to 25 per cent. Both the $3 million and $10 million thresholds are indexed over time, in increments of $150,000 and $500,000 respectively, so the lines are intended to move with inflation rather than staying fixed forever.

There is one point of confusion worth clearing up immediately, because a great deal of older commentary gets it wrong. In its earlier, controversial form, Division 296 was designed to tax unrealised gains — that is, increases in the paper value of assets you had not sold. That version attracted heavy criticism, and it is not what became law. The final legislation works on a realised-earnings basis. That distinction matters enormously to how you think about the assets in your fund, and correcting it early is part of why you should be careful about which sources you rely on when planning.

Two things follow from this. First, Division 296 only bites once your Total Superannuation Balance crosses the threshold — and your Total Superannuation Balance is, by definition, a function of the market value of everything your fund holds. Second, because the tax is calculated on earnings attributable to the balance above the threshold, the accuracy of those underlying values flows directly through to the amount of tax payable. Get the values wrong and you either overpay or expose yourself to an ATO adjustment. Neither is a good outcome.

Step 3 — Why this is a valuation story, not just a tax story

Most of what has been written about Division 296 has been written by accountants and financial advisers, and it focuses — reasonably enough — on tax strategy, contribution planning and whether large balances should remain in super at all. That is important work, and it is their lane. But there is a quieter, more foundational issue sitting underneath all of it, and it is the one we care about most: none of the tax calculations mean anything until the assets are valued properly.

Think back to an analogy we use constantly when we value businesses. The value of a business is best thought of as a moving target. It is specific to a point in time; its value today can be very different from its value three months ago or three months from now, and unlike a car or a house it has many moving parts, a great number of them intangible. The assets inside an SMSF behave the same way. A commercial property, a stake in a private company, or units in an unlisted trust are not like listed shares with a price on a screen. Their value is a moving target that has to be pinned to a specific date using judgement, evidence and method — and Division 296 has now told us exactly which date matters and exactly why it matters.

This is what we mean when we say Division 296 is a valuation story. The tax outcome is only as good as the valuation it is built on, and the harder an asset is to value, the more that is true.

Step 4 — Which assets create the valuation problem

Not every asset in a super fund poses a challenge. Listed shares, managed funds and cash are straightforward — there is a ready market and an observable price at 30 June, and there is little to argue about. The difficulty lives almost entirely in the illiquid and the unique.

The assets that typically require real valuation work include direct property, both residential and commercial; business real property held inside the fund, which is a very common structure for business owners who hold their premises in their SMSF; unlisted or private company shares; units in unlisted or related unit trusts; collectibles and other alternative assets; and cryptocurrency, particularly thinly traded tokens. What these have in common is that there is no screen you can glance at to find their worth. Each requires evidence, methodology and a defensible conclusion.

This matters more under Division 296 than it did before, because the ATO has signalled that it is increasing its scrutiny of market valuations, particularly for complex or illiquid assets. A general guide to the level of care expected: where a single asset represents a large proportion of the fund’s value, or where its value has moved materially over the past year, that is precisely the sort of asset the regulator will expect to see supported by a proper, independent valuation rather than a trustee’s estimate. In other words, the assets that are hardest to value are also the ones most likely to be examined — which is exactly the wrong combination to leave until the last minute.

Step 5 — The one-off CGT cost-base reset

Here is the part of Division 296 that turns a compliance obligation into a genuine planning opportunity, and it is the part most directly tied to valuation.

For SMSFs, the legislation provides a once-only, optional election to reset the cost base of the fund’s directly held CGT assets to their market value as at 30 June 2026. In plain terms, the reset allows a fund to recognise the value that had accrued in its assets before Division 296 commenced, so that gains built up over years — sometimes decades — before 1 July 2026 are effectively locked out of the new regime. For a fund holding, say, a commercial property bought long ago that has appreciated substantially, the difference this makes can be significant.

But the election comes wrapped in conditions that you have to understand before you act, because getting them wrong is costly and, in one respect, permanent. The election is not automatic — a trustee has to actively choose it. It is made at the fund level and applies across the fund’s eligible directly held CGT assets, so it is an all-or-nothing decision rather than something you can cherry-pick asset by asset. It is generally available only to assets the fund holds directly, not to assets held indirectly through other structures. The relevant valuation date is 30 June 2026, even though the election itself is made later, in the fund’s 2026–27 tax return. And, most importantly, once made, the election cannot be revoked.

Notice how every one of those conditions leans on valuation. An election made at fund level across all eligible assets means every one of those assets needs a defensible value at 30 June 2026. An election that cannot be reversed means you want to be confident in those values before you commit, not afterwards. A market-value benchmark tied to a specific date means the valuation has to be dated correctly and supported by evidence as at that date. This is why we say the cost-base reset is where the valuation and the tax outcome meet — and it is the hook that carries us into Part 2.

One firm caveat before we go on: whether the reset is right for your fund is a decision to make with your accountant or licensed financial adviser, because it depends on your assets, your intentions and your broader tax position. Our role, and the focus of this guide, is the valuation that any such decision has to stand on.

Step 6 — Being proactive, not reactive

We opened Part 1 with the proactive-versus-reactive theme, and we return to it deliberately, because with Division 296 it is not an abstract principle — it is a scheduling problem with a hard deadline.

The valuation date that matters is 30 June 2026. That is fixed. What is not fixed is your ability to get a valuer in time. Commercial and specialist valuers who service the SMSF market are reporting lead times of around four to six weeks, and those lead times lengthen as the deadline approaches — stretching to six to eight weeks from around May, with queues that only get worse the closer you get to 30 June. A fund that waits until June to arrange valuations of hard-to-value assets may simply be unable to obtain a properly executed valuation as at the required date. And because the cost-base reset is irrevocable and depends on those valuations, there is no comfortable way to fix that after the fact.

Framed correctly, being proactive here is cheap insurance. The cost and effort of arranging valuations early is small relative to the tax at stake and the risk of missing the window entirely. That is the whole argument for treating this as your first move rather than your last.

Part 2 — Getting a Defensible Valuation for Division 296

Part 1 was about the “why”. Part 2 is about the “how” — what the ATO actually expects, what separates a valuation that will withstand scrutiny from one that will not, who should prepare it, and how to sequence the work so you are not caught short.

Step 7 — What “market value” actually means to the ATO

The phrase “market value” gets used loosely in everyday conversation, but for superannuation purposes it has a specific, evidence-driven meaning. In broad terms, it is the amount that a willing buyer and a willing seller, both acting knowledgeably and at arm’s length, would agree on — and, critically, it must be supported by objective data rather than opinion or wishful thinking.

For Division 296, the values have to be established as at 30 June 2026. That timing point is not a technicality. A valuation dated to the wrong point, or one prepared long before or after the relevant date without proper support, may not stand up. The ATO has made clear that it will look more closely at market valuations in 2026, and that valuations which are not properly documented and independently supported may be challenged. The practical takeaway is simple: for the assets that matter, a value needs to be more than a number — it needs to be a number you can defend, dated correctly and backed by evidence.

Step 8 — What a defensible, audit-ready valuation looks like

This is where experience shows, and it is worth being concrete about what “defensible” means, because it is the difference between a valuation that protects you and one that merely exists.

A defensible valuation is independent — prepared by someone without a stake in the outcome, which removes the argument that the number was shaped to suit the trustee. It rests on a sound, appropriate methodology suited to the asset in question, whether that is a property, a private company interest or units in a trust, rather than a one-size-fits-all rule of thumb. It is dated to the relevant valuation date and supported by evidence that was available as at that date. And it is documented thoroughly enough that, if the ATO asks how the figure was reached, the answer is already on the page.

Contrast that with the back-of-the-envelope alternative: a trustee’s own estimate, a figure carried forward from a prior year because “nothing much has changed”, or a number pulled from a quick online search. In an ordinary year those approaches might pass unremarked. Under Division 296, with a regulator paying closer attention and an irrevocable election potentially riding on the figure, the gap between the two approaches is not a matter of neatness — it is a matter of risk. The whole point of paying for a proper valuation is that the cost is small relative to what a challenged or unsupported value can cost you later.

There is a direct parallel here with how we counsel clients on choosing a business appraiser. Accreditation is a baseline that lowers the risk of hiring someone who does not know what they are doing, but accreditation alone does not make someone good — there are capable and less capable practitioners in every profession. What you are really looking for is someone who will take the time to understand your fund’s assets before quoting, who can explain the risks in language you understand, who can set out the process clearly, and who can justify their fee against the complexity and the stakes. If a valuer cannot do those things, the price is beside the point.

Step 9 — Who should value your assets

A common question is whether a trustee can simply value the fund’s assets themselves. The honest answer is that it depends on the asset and the purpose. For some straightforward assets, a trustee estimate supported by objective evidence may be acceptable. But for material or illiquid assets — property, unlisted shares, related-trust units — and especially where an irrevocable cost-base reset election is going to rest on the figure, an independent valuation by a qualified valuer is the far safer path.

The reason comes back to independence and defensibility. A trustee has an obvious interest in the outcome, which is precisely the weakness a regulator will probe. An arm’s-length, independent valuation removes that objection and strengthens the fund’s position if the value is ever questioned. Think of it the way you would think about any high-stakes opinion: you are not just buying a number, you are buying a well-supported opinion of value that someone with the right credentials is prepared to stand behind. For the assets that carry real Division 296 consequences, that is worth doing properly.

It is also worth being clear about the division of roles. Your accountant and licensed financial adviser own the decisions — whether you are in scope, whether to make the cost-base reset election, and how Division 296 fits your broader position. The valuer owns the numbers those decisions rely on. Good outcomes come from both working together, each in their lane.

Step 10 — Timing and lead times: an action calendar

Because the valuation date is fixed at 30 June 2026 and valuer capacity is not, the single most useful thing you can do is work backwards from the deadline and book early.

As a rough guide, arranging valuations in March or April buys you comfortable turnaround and room to deal with any complications — a property that needs an inspection, a private company interest that requires more information, a trust whose accounts need to be brought up to date. Leaving it to May typically means lead times of six to eight weeks and rising risk that the work will not be finished cleanly by 30 June. Leaving it to June is a genuine scramble, and for hard-to-value assets it may already be too late to obtain a properly executed valuation as at the required date.

If your fund holds several hard-to-value assets, the case for starting early is even stronger, because those valuations often cannot be done in parallel at the last minute — and the cost-base reset, if you choose it, requires every eligible directly held asset to be valued, not just one. The message is the same one we started with: proactive beats reactive, and here the calendar makes that concrete.

Step 11 — How InteleK helps

This is where we come in. InteleK’s accredited valuation professionals prepare independent, defensible valuations of the assets that Division 296 puts under the spotlight — property, business interests, private company shares and other illiquid holdings — dated to 30 June 2026 and documented to withstand ATO scrutiny. For funds holding several such assets, we coordinate the valuations so you receive one consistent, well-supported set of figures rather than a patchwork.

Just as importantly, we take the time to understand your situation before quoting, we explain the risks in language that makes sense, and we set out the process and our fee clearly so you know exactly what you are paying for and why. If you are weighing up the cost-base reset with your adviser, we can provide the valuations that decision has to stand on, in time to make it well before the deadline.

If you would like to talk it through, we would be glad to hear from you and to help you get ahead of 30 June 2026 rather than chasing it.

In Summary

Division 296 changes the status of valuation inside your SMSF. What used to be a routine annual figure is now a number with direct tax consequences, and the assets that are hardest to value are the ones most likely to attract attention. Three moves follow from everything above. First, work out with your adviser whether your fund is in scope. Second, decide — again with your adviser — whether the one-off CGT cost-base reset is right for you, remembering that it is irrevocable and applies across all eligible directly held assets. Third, and underpinning both of the first two, obtain defensible, independent valuations dated to 30 June 2026, and do it early enough that valuer lead times do not decide the outcome for you.

As with everything in valuation, the quality of the output depends on the quality of the input and the timing of the decision. Get the valuations right, and get them early, and Division 296 becomes a problem you have managed rather than one that has managed you.

Frequently Asked Questions

Do I need a valuation for Division 296?
If your fund holds assets that are hard to value — property, unlisted shares, related-trust units, collectibles or crypto — then yes, defensible market valuations dated to 30 June 2026 are effectively essential, both for the Total Superannuation Balance calculation and for any cost-base reset election. Listed shares and cash are straightforward; the illiquid assets are where the work lies.

What is the valuation date?
30 June 2026. Even though the cost-base reset election is made later, in the 2026–27 tax return, the values it relies on must be established as at 30 June 2026.

Is the CGT cost-base reset compulsory?
No. It is an optional, once-only election. It is made at the fund level, applies across all eligible directly held CGT assets, and cannot be revoked once made — so it should only be chosen after advice from your accountant or licensed financial adviser.

Does Division 296 tax unrealised gains?
No. The version that became law taxes realised earnings. The earlier proposal to tax unrealised gains did not proceed — a common point of confusion in older commentary.

Can I value the assets myself?
For some simple assets, a trustee estimate supported by evidence may be acceptable. For material or illiquid assets, and especially where an irrevocable election depends on the figure, an independent valuation is strongly recommended and far safer if the ATO ever queries the value.

When should I arrange valuations?
As early as possible — ideally March or April 2026. Valuer lead times run to four to six weeks and stretch to six to eight weeks from May, with June bookings at real risk of missing the 30 June date.