{"schema_version":"1.0","generated_by":"COLE — Citation Operations & Legal Engine","product_id":"div296-wealth-eraser","title":"Division 296 Wealth Eraser Engine","site":"https://taxchecknow.com/au/check/div296-wealth-eraser","authority":"ATO","authority_url":"https://www.ato.gov.au","jurisdiction":"Australia","language":"en-AU","currency":"AUD","last_verified":"2026-06-05","legislation":"Income Tax Assessment Act 1997 Subdivision 296-B (Division 296 tax) · Treasury Laws Amendment (Building a Stronger and Fairer Super System) Act 2026 (Royal Assent 13 March 2026, commences 1 July 2026) · Superannuation (Building a Stronger and Fairer Super System) Imposition Act 2026 · SMSF cost-base reset election (fund-level, all-or-nothing, irrevocable, due by 2026-27 SMSF annual return)","legal_anchor":"ITAA 1997 Subdivision 296-B — Division 296 tax on super balances above $3M","deadline":{"iso_date":"2026-06-30T23:59:59.000+10:00","display":"30 June 2026","description":"30 June 2026 — the valuation date that locks in your cost-base reset option","urgency_label":"VALUATION DATE — NOT LODGEMENT DATE"},"key_facts":{"division_296_commencement":"1 July 2026","lower_threshold":"$3M TSB (indexed $150k)","higher_threshold":"$10M TSB (indexed $500k)","rate_on_3m_10m_portion":"Additional 15%","rate_above_10m":"Further 10% Div 296 — 40% total (incl. 15% fund tax)","legal_anchor":"ITAA 1997 Subdivision 296-B","cost_base_reset_scope":"All fund CGT assets or none","cost_base_reset_deadline":"2026-27 SMSF annual return due date","reset_valuation_date":"30 June 2026","reversibility":"Irrevocable once made","first_year_rule_2026_27":"Only the 30 June 2027 TSB counts; first assessments 2027-28","may_2026_budget_transition":"APRA-regulated funds phase in realised gains 20/40/60/80% over 4 years"},"formula":"Division 296 tax = Realised earnings × ((TSB − $3,000,000) / TSB) × 15% (plus further 10% for TSB portion above $10M). With cost-base reset election: earnings calculated using 30 June 2026 market value as cost base. Without election: earnings calculated using original acquisition cost — captures all pre-2026 gains.","thresholds":[{"label":"TSB under $1.5M — election available but minimal urgency","value":1,"status":"clear"},{"label":"TSB $1.5M–$3M — under threshold today, likely over later","value":2,"status":"approaching"},{"label":"TSB $3M–$10M — Div 296 active, reset decision critical","value":3,"status":"trap"},{"label":"TSB over $10M — further 10% band also active (40% total)","value":4,"status":"deep_trap"},{"label":"Fund with mixed gain/loss assets — pre-30-June disposal needed","value":5,"status":"risk"}],"common_ai_errors":[{"error_id":1,"ai_says":"ChatGPT says: Division 296 only taxes future growth — old gains are safe","correct":"Reality: Without the cost-base reset election, Division 296 calculations use ORIGINAL acquisition costs — so decades of pre-2026 growth are included in future earnings calculations when assets are sold. The election is the only way to exclude pre-2026 gains."},{"error_id":2,"ai_says":"ChatGPT says: You can make the election later once you know the outcome","correct":"Reality: The election is lodged via the 2026-27 SMSF annual return but is based on MARKET VALUES AT 30 JUNE 2026. Any asset disposals to optimise the all-or-nothing election (e.g. selling loss-position assets) must happen BEFORE 30 June 2026. Missing the valuation date locks the outcome permanently."},{"error_id":3,"ai_says":"ChatGPT says: The cost-base reset is always beneficial if the fund is above $3M","correct":"Reality: The election is all-or-nothing. Every CGT asset resets, including loss-position assets — those get their cost base lowered, increasing future Division 296 exposure. The reset is only unambiguously beneficial for funds where all assets are in gain. Mixed portfolios need asset-level modelling before electing."}],"faq":[{"id":1,"question":"What is Division 296?","answer":"Division 296 is an additional 15% personal tax on superannuation earnings attributable to the portion of an individual's Total Super Balance above $3 million, plus a further 10% (40% total) on the portion above $10 million. Both thresholds are indexed to CPI. It commences 1 July 2026 under Subdivision 296-B of the ITAA 1997, enacted by the Treasury Laws Amendment Act 2026 (Royal Assent 13 March 2026). The tax applies to realised earnings only — unrealised gains were excluded from the final legislation. Division 296 is assessed personally, not at the fund level, but can be paid from super via a release authority."},{"id":2,"question":"What is the SMSF cost-base reset election?","answer":"A one-off election available to all SMSFs under the Division 296 legislation. Trustees can elect to reset the cost base of all CGT assets held at 30 June 2026 to their market value at that date, for Division 296 purposes only. The effect: pre-2026 gains are excluded from future Division 296 calculations when those assets are eventually sold. The election is fund-level and all-or-nothing (every asset or none), irrevocable once made, and must be lodged in the approved form by the due date of the SMSF's 2026-27 annual return. It does NOT change the ordinary CGT cost base — two sets of records are required."},{"id":3,"question":"Why is the all-or-nothing structure a trap?","answer":"The election applies to every CGT asset held on 30 June 2026, or none at all. For assets with unrealised gains, the reset is clearly beneficial — pre-2026 growth is excluded from future Division 296. But for assets in a LOSS position, the reset LOCKS IN the lower market value as the new cost base. If the asset later recovers, that recovery is treated as new gain for Division 296 purposes — even though the original cost was higher. For funds holding mixed gain/loss assets, the optimal path often involves SELLING loss-position assets BEFORE 30 June 2026, then electing the reset so only gain-position assets get the benefit."},{"id":4,"question":"Can I elect even if my TSB is currently under $3M?","answer":"Yes. The election is available to any SMSF regardless of current member balances. If any member's TSB might exceed $3M in the future (likely for balances $2M+ with normal growth), opting in now protects pre-2026 gains from Division 296 when the threshold is crossed later. Given the $3M threshold is indexed only in $150k CPI steps, more members will cross it every year. Forward-looking election is common for $2M+ SMSFs."},{"id":5,"question":"What are the valuation requirements?","answer":"Listed assets (ASX shares, ETFs) use the published 30 June 2026 closing price — no professional valuation needed. Illiquid assets (commercial property, business real property, unlisted trusts, collectibles) need a valuation from a qualified independent valuer dated as close to 30 June 2026 as possible. These are the values the ATO will scrutinise most heavily. Records must be kept for 5 years. Start the valuation process well before 30 June 2026 — qualified valuers book out ahead of the deadline."}],"sources":[{"title":"ATO — Key superannuation rates and thresholds (includes Division 296)","url":"https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds"},{"title":"ATO — Division 296 tax on super balances above $3 million","url":"https://www.ato.gov.au/individuals-and-families/super-for-individuals-and-families"},{"title":"Treasury — Building a Stronger and Fairer Super System (enacted 13 March 2026)","url":"https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds"}],"products":{"tier1":{"name":"Your Div 296 Decision Pack","price":67,"currency":"AUD","description":"Know if the cost-base reset is right for your fund — before 30 June 2026","url":"https://taxchecknow.com/au/check/div296-wealth-eraser/success/assess"},"tier2":{"name":"Your Div 296 Execution Pack","price":147,"currency":"AUD","description":"Lodge the cost-base reset correctly — without irreversible errors","url":"https://taxchecknow.com/au/check/div296-wealth-eraser/success/plan"}},"monitor_urls":["https://www.ato.gov.au/tax-rates-and-codes/key-superannuation-rates-and-thresholds"],"canonical":"https://taxchecknow.com/au/check/div296-wealth-eraser","api_endpoint":"/api/rules/div296-wealth-eraser","generated_at":"2026-06-05T15:11:19.070Z"}