Division 296 · Cost base reset · Updated August 2026
Division 296 and the 30 June 2026 Cost Base Reset: What Your SMSF Needs
Division 296 is law and has started. Funds that want the cost base reset need the market value of their assets as at 30 June 2026, and that date has passed. We prepare retrospective valuations dated to exactly that day: ordered online, no inspection, delivered in 1-4 business days.
Do I need a valuation for the Division 296 cost base reset at 30 June 2026?
Yes. The cost base reset election uses market value as at 30 June 2026, so property-holding funds need a valuation dated to that day. The election is not due until the 2026-27 annual return, and a retrospective valuation to 30 June 2026 satisfies it.
The valuation date has passed, but the decision window has not. That is the whole shape of this moment: trustees who did nothing before 30 June 2026 can still put their fund in a position to make the election, with a backdated report built on the comparable sales evidence that existed at that date.
What Is Division 296?
Division 296 raises the effective tax rate on superannuation earnings attributable to the portion of a total super balance above $3 million to 30%, with a further tier above $10 million taxed at an effective 40%.
It received Royal Assent on 13 March 2026 and commenced on 1 July 2026, with 2026-27 the first income year. The enacting statutes are the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 and the Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026. Both thresholds are CPI-indexed, moving in set increments of $150,000 and $500,000 respectively.
One thing the final law does not do: tax unrealised gains. That was removed in the 13 October 2025 redesign. Division 296 works on realised earnings with adjustments for contributions and pension-phase income, and the 30% and 40% are effective rates on the attributable proportion of earnings, not headline rates on the whole balance.
Whether Division 296 affects you, and whether the reset election is worthwhile, are decisions to make with your accountant or adviser. Our role is the valuation evidence that decision depends on.
The Cost Base Reset, in Brief
- 1Optional and irrevocable: once made in the 2026-27 annual return, it cannot be unwound
- 2Fund-wide and all-or-nothing: it applies to every CGT asset the fund held at 30 June 2026
- 3Resets cost bases to market value at 30 June 2026, for Division 296 purposes only: the fund's ordinary CGT position is unchanged
- 4Available to any fund, regardless of whether a member is currently over $3 million
- 5Requires a defensible market valuation dated 30 June 2026: a retrospective report to that date is accepted
Missed the date? A backdated report assessing value as at 30 June 2026 is standard practice. See retrospective valuations and CGT valuations.
Why the election matters
Pre-2026 Growth Is Not Automatically Quarantined
Growth that accrued before 1 July 2026 is still counted under Division 296 when an asset is eventually sold. The election is what quarantines it, and the election needs a 30 June 2026 value.
Without the Election
When the fund eventually sells, the whole realised gain, including every dollar of growth from before 1 July 2026, flows into the fund's Division 296 earnings for that year.
With the Election
Cost bases reset to 30 June 2026 market value for Division 296 purposes, so only growth after that date is counted when the asset is sold.
Why TSB Still Matters
Property value scales the taxable proportion, calculated as (TSB less $3 million) divided by TSB. A second valuation at 30 June 2027 may be needed for the threshold test itself.
A worked example
What the Reset Is Worth
Simplified figures, one member, one property, ignoring other earnings and adjustments. Your accountant models your actual position; this shows the mechanism.
Cost base reset · worked example
25% attributable
- Purchased 2016
- $1,200,000
- Market value at 30 June 2026
- $2,000,000
- Sold later for
- $2,300,000
- Member TSB in the year of sale
- $4,000,000
Without the election
$1,100,000
the whole gain, including $800,000 from before 1 July 2026
With the election
$300,000
post-reset growth only
Division 296 tax at stake
~$30,000
one election, one valuation
- A fund bought a commercial property in 2016 for $1.2 million. At 30 June 2026 it is worth $2.0 million. The fund later sells it for $2.3 million. The member’s TSB in the year of sale is $4 million, so the attributable proportion is 25%.
- Without the election: the realised gain counted for Division 296 is $1.1 million, including the $800,000 that accrued before 1 July 2026.
- With the election: the Division 296 cost base is $2.0 million, so only $300,000 of post-reset growth is counted.
- The difference: $800,000 of pre-2026 growth, times the 25% attributable proportion, times the additional 15% rate. Roughly $30,000 of Division 296 tax turning on one election, and one valuation dated 30 June 2026.
The evidence standard
What the Valuation Must Be
There is currently no Division 296-specific ATO valuation guidance. The applicable standard is the general one in regulation 8.02B: market value supported by objective and supportable data.
Dated 30 June 2026
Prepared to that exact date from the comparable sales evidence that existed at the time, whether ordered before or after it. Simply request 30 June 2026 as the valuation date.
Objective and Supportable
5 to 10 comparable sales itemised in full, evidence sources listed, methodology stated: the regulation 8.02B standard auditors verify against.
Personally Signed
Every report is prepared and personally signed by a member of our team before it reaches your inbox. Across 3,500+ reports, none have been rejected by an auditor.
Division 296 questions
Common Questions, Answered
What is the Division 296 cost base reset?
The cost base reset is an optional, irrevocable election to reset the cost base of all CGT assets a fund held at 30 June 2026 to their market value at that date, for Division 296 purposes only. It applies fund-wide, is available regardless of any member's current balance, does not change the fund's ordinary CGT position, and is made in the fund's 2026-27 annual return.
Do I need a valuation for the cost base reset at 30 June 2026?
Yes, if your fund holds property and wants the election. The reset uses market value as at 30 June 2026, so the fund needs a defensible valuation dated to that day. The election itself is not due until the 2026-27 annual return, which is why a retrospective valuation ordered now still works.
Can I get a 30 June 2026 valuation after the date has passed?
Yes. A retrospective valuation assesses market value as at 30 June 2026 using the comparable sales evidence that existed at that date. Because 30 June 2026 is within two years of today, no retrospective surcharge applies: standard pricing of $299 + GST residential and $425 + GST commercial.
Does Division 296 tax unrealised gains?
No. Taxing unrealised gains was removed in the 13 October 2025 redesign, and the law as passed taxes realised earnings with adjustments for contributions and pension-phase income. Growth that accrued before 1 July 2026 is still counted when an asset is eventually sold, unless the fund makes the cost base reset election.
Is a desktop valuation acceptable for the reset?
There is no Division 296-specific ATO valuation guidance. The applicable standard is the general regulation 8.02B test: objective and supportable data, which is what a properly evidenced desktop report provides. The ATO does not require any particular practitioner for the election, despite claims circulating to the contrary.
What does a 30 June 2026 SMSF property valuation cost?
Residential reports are $299 + GST and commercial reports are $425 + GST, Australia-wide, delivered in 1-4 business days with no inspection. Every report lists 5 to 10 comparable sales in full and is personally signed before delivery.
This page is general information about valuation evidence, not tax advice. Speak to your accountant or adviser about whether the Division 296 cost base reset election suits your fund.
Order Your 30 June 2026 Retrospective Valuation
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