Guide · Division 296 · Last Updated 4 August 2026

The Division 296 Cost Base Reset and the 30 June 2026 Valuation

William Spark, Founder & Director

2025 SMSF Adviser Awards, Newcomer of the Year Winner · About

Do I Need a Valuation for the Division 296 Cost Base Reset at 30 June 2026?

That answer compresses a lot of law. This article unpacks it: what Division 296 actually is now that it has passed, what the cost base reset election does and does not do, why the 30 June 2026 date matters even though it is behind us, and what the valuation itself has to look like to hold up. It sits under our complete guide to SMSF property valuations, which covers the wider evidence rules.

Division 296, as Passed

Division 296 received Royal Assent on 13 March 2026 and commenced on 1 July 2026, with 2026-27 as 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. The measure applies an additional tax to superannuation earnings attributable to the portion of a total super balance above $3 million, taking the effective rate on that attributable proportion to 30 per cent, with a further tier above $10 million taking it to 40 per cent. Both thresholds are indexed to CPI in set increments of $150,000 and $500,000 respectively, not smoothly each year.

One point is worth stating loudly, because a large share of the commentary still online describes a version of the law that no longer exists: Division 296 does not tax unrealised gains. That design was removed in the 13 October 2025 redesign. The final law is a fund-level measure on realised earnings, with adjustments for contributions and pension-phase income. If an article you are reading talks about paying tax on paper gains each year, it is describing the abandoned bill, not the Act.

What the Cost Base Reset Election Does

The Act includes a one-off transitional choice: a fund may elect to reset the cost base of its CGT assets to their market value as at 30 June 2026, for Division 296 purposes. Four features define it. It is optional. It is irrevocable once made. It is fund-wide and all-or-nothing, covering every CGT asset the fund held at 30 June 2026, not a chosen few. And it operates for Division 296 purposes only, so the fund’s ordinary CGT position is unchanged either way.

Why it exists is the part that matters for property funds. When an asset is eventually sold, the growth Division 296 sees is measured from the asset’s cost base. Without the election, that includes every dollar of growth that accrued before 1 July 2026, years before the tax existed. The election is what quarantines that pre-2026 growth: reset the cost base to the 30 June 2026 market value, and only movement after that date counts. Nothing about the quarantine is automatic. A fund that does nothing keeps its original cost bases, and its pre-2026 growth stays in scope.

Consider a fund that bought a warehouse for $1.2 million in 2015, worth $2.0 million at 30 June 2026, and sold for $2.3 million a few years later. Without the election, Division 296 eventually sees the full $1.1 million of growth. With it, the relevant growth is $300,000. Whether that trade is worth making across every asset the fund owns, irrevocably, is a judgement about the fund’s members and plans, and it belongs with the fund’s accountant or adviser. The mechanics, though, are not a judgement call: the election requires a market value dated 30 June 2026, for every CGT asset, property included.

The Deadline That Is Not Quite a Deadline

The valuation date, 30 June 2026, has passed. The election has not. It is made in the fund’s 2026-27 annual return, which for most funds is lodged in 2027 or later. That gap is the practical opportunity: a fund that did not order a valuation before 30 June can still make the election, using a retrospective valuation prepared now and dated 30 June 2026.

A retrospective valuation is not a guess about the past. It is built from the comparable sales evidence that existed at the valuation date: sales that had settled around 30 June 2026, the market conditions of that time, and a stated methodology connecting the evidence to the concluded value. It is the same discipline as a current-date report pointed at a fixed date, and it is a standard product for us. Ours are covered in detail on the retrospective valuations page.

Note also that a fund weighing the election may end up needing two valuations for different jobs: one dated 30 June 2026 for the reset decision, and its ordinary 30 June 2027 value for annual reporting and the total super balance test. They answer different questions and cannot substitute for each other.

What the Valuation Must Look Like

Here an honest caveat serves better than a confident overclaim: there is currently no Division 296-specific ATO valuation guidance. The applicable standard is the general one under regulation 8.02B, which requires market value supported by objective and supportable data. The ATO does not require any particular practitioner for the election, and a claim circulating in the market that a particular class of professional is mandated for Division 296 purposes has no basis in the Act or in ATO guidance.

What an irrevocable, fund-wide election does demand is evidence that will still look defensible years from now, when the reset values feed into a real tax calculation. For property, that means comparable sales itemised in full, evidence sources named, and a methodology stated on the page. Every report we prepare lists 5 to 10 comparable sales with the details an auditor needs to verify each one, and is personally signed by a member of our team. Across 3,500+ reports, not one has been rejected by an auditor. For CGT events beyond the reset, from sales to inheritances, see CGT valuations.

What to Do Now

If your fund holds property and the election is even a maybe, get the 30 June 2026 valuation while the evidence is fresh. Comparable sales from mid-2026 are easy to assemble today; they get no easier with time. Order through the normal residential or commercial form and set the valuation date to 30 June 2026. Reports are $299 + GST residential and $425 + GST commercial, delivered in 1-4 business days, Australia-wide, no inspection and no payment required up front. The full campaign detail, including a worked example, is on our Division 296 page.

Frequently Asked Questions

Last updated 4 August 2026. This article is general information about valuation evidence, not tax advice. Whether the Division 296 election suits your fund is a decision for your accountant or adviser.