Division 296 CGT Election for SMSFs

Purpose of the CGT Election (Division 296)

The Division 296 CGT election allows an SMSF trustee to reset the cost base of CGT assets held as at 30 June 2026 to their market value on that date.

The main aim is to avoid double taxation of growth in asset value where part of the gain accrued before 1 July 2026 but is later assessed under the new Division 296 superannuation tax rules.

What it actually affects

• Only impacts the calculation of Division 296 superannuation earnings
• Does not change the SMSF’s normal taxable income or the SMSF tax return position

All-or-Nothing Rule

The election is not selective.

If made, it must apply to all CGT assets held by the SMSF on 30 June 2026.

This means:

• Trustees cannot pick and choose individual assets
• The election applies to every relevant CGT asset, or none at all

Because of this, advance planning is essential before the cut-off date.

Planning Before 30 June 2026

If trustees only want certain assets to be included in the election, any excluded assets generally need to be sold or otherwise disposed of before 30 June 2026.

This often requires early planning to ensure assets can be sold in an orderly way rather than under time pressure.

Timing Risk Around Disposals

A key practical risk arises if assets are sold after a decision is made to proceed with the election, but before it is formally completed.

If any asset held on 30 June 2026 is disposed of before the election is properly finalised, it may create compliance issues and potentially affect the validity of the election due to the “all assets” requirement.

For this reason, it is generally safer to ensure the election is properly prepared and aligned with the SMSF’s asset position before any post–1 July 2026 disposals take place.

Key Takeaways

• The election applies to all SMSF CGT assets held at 30 June 2026
• Selective application is not allowed
• Asset restructuring or disposals should be completed before 30 June 2026 if needed
• Timing and sequencing of disposals matters to avoid invalidating the election
• Professional advice is important due to the interaction between CGT rules and Division 296 tax outcomes

If you need assistance, please let us know.