Division 296 Super Tax – Cost Base Reset

The Government’s Division 296 tax came into effect on 1 July 2026, and will be applied from 30 June 2027 to super fund members, where an individual member has a >$3M super balance across all funds.

Although FY27 will be the first year the ATO will issue additional tax assessments to members who are required to pay Division 296 tax, there are things which need to be done at 30 June 2026 which may help minimise the impact of any Division 296 tax payable in FY27 and future years.

Members with <$3M in super will not be immediately affected by Division 296, however, an important once-only cost base reset election is available which may benefit you in the future.

Cost Base Reset Election

The Division 296 legislation allows trustees to elect to reset the cost base of the fund’s asset to their market value as at 30 June 2026.

Making this election means that any unrealised capital gains that accrued up to 30 June 2026 will not be included when calculating future Division 296 tax.

Instead, only gains arising after 30 June 2026 will be taken into account for Division 296 calculation when the asset is eventually sold.

The election must be made before the earlier of:

• the date the fund's 2026–27 income tax return is lodged; or

• the due date for lodging that return.

What We Will Do

Regardless of the current value of your super balance, we will review the assets held by your super fund as at 30 June 2026 to determine whether making the cost base reset election is appropriate and beneficial for you. There may be instances where a cost base reset may not be beneficial, and in these cases, no election will be made.

Where appropriate, we will prepare the required election and supporting documentation for the trustees to review and sign.

Although Division 296 currently applies only to members with >$3M in super, this election may still be valuable for members with lower balances.

As investment values grow over time, a member's balance may exceed the threshold in the future. As this election is only available once, it is important to carefully consider whether it should be made for you now.

Please note:

• The election applies to all assets within the fund and cannot be made for selected assets only

• This is a one-off election - once made, it cannot be amended, revoked or made again in the future.

Members Approaching the $3M Threshold

We will be contacting members whose total super balance exceeded $2M at 30 June 2026 to discuss the potential future impact of Division 296 for you specifically.

If you have any questions regarding Division 296, or how these changes may affect you, please contact your Client Manager.