One-off capital gains tax reset for SMSFs: what you need to know

One-off capital gains tax reset for SMSFs: what you need to know

Julie Schofield — Executive Business Unit Leader, Private Business Services and Superannuation

In summary

• From 1 July 2026, Division 296 changes how super earnings are taxed for super balances over $3 million.
• For SMSFs, there is a once-only, optional reset that can lock in asset values (the cost base) as at 30 June 2026 for Division 296 purposes.
• The election is not automatic. It is made at fund level, applies across the fund's eligible directly held CGT assets, and cannot be picked asset by asset.
• It does not change your fund's ordinary CGT position or regular tax treatment.
• For some SMSFs, it may reduce future Division 296 tax exposure and provide more flexibility when assets are sold.

What is the one-off CGT reset?

The reset is a transitional rule introduced with Division 296. It lets an SMSF treat the market value of eligible directly held CGT assets at 30 June 2026 as their new starting point for Division 296 purposes.

This reset allows eligible funds to re-set the cost base of assets for the purposes of calculating future Division 296 tax. It draws a line under gains accrued before 1 July 2026, so only growth from that point forward is considered for Division 296 purposes. It does not change the fund's ordinary tax treatment.

Who should consider it?

The reset may be relevant for SMSFs holding long-term assets, expecting balance growth, or wanting flexibility over the timing of future sales. It may also be worth considering even if no member is above the $3 million threshold at 30 June 2026 — particularly where the fund holds assets with significant accrued gains and members may exceed the threshold in future years.

Why does the reset exist?

The policy intent is simple: gains built up before the new regime starts should not be swept into future Division 296 calculations.

For SMSFs with significant unrealised gains today, that can improve fairness, increase certainty, and support cleaner sale decisions later.

What the reset does not do

The reset does not trigger CGT, change ordinary tax outcomes, impact cash flow, or automatically reduce tax. It is not applied asset by asset or member by member. If the fund opts in, the treatment applies across the whole fund for Division 296 purposes.

Timing matters

Timing is critical. While the election is made in the fund's 2026–27 return, the relevant valuation date is 30 June 2026. That means any required asset valuations need to be prepared as at that date.

It is also important to remember that Division 296 is assessed at the individual member level, even though earnings are still calculated within the fund and attributed across members. For some SMSFs, that may add complexity and, in some cases, require an actuarial certificate where one was not previously needed.

Getting the balance right

The CGT reset is one tool designed to help SMSFs transition into the new rules. Understanding how the opt-in works, when it needs to be made, and how it may affect future planning can help trustees make a more informed decision.