General information only. This article explains a new tax using ATO guidance. It is not tax or financial advice. Strawberry Finance is a credit assistance provider and is not a registered tax agent. Correct as at November 2026.
Division 296 SMSF property, the short answer: from 1 July 2026, members with a total super balance above $3 million pay an extra 15% tax on the share of fund earnings linked to the balance above that level, with a further 10% above $10 million.
The tax is assessed to you as a member, not to the fund, but your SMSF has to calculate and report the earnings. If your fund holds Perth property, there is also a one-off CGT adjustment choice to make for the 2026-27 year.
Parliament passed the laws in March 2026. Here is how Division 296 SMSF property rules work, based on what the ATO has published so far.
Division 296 is a tax on earnings linked to large super balances. The ATO explains it as 15% of your taxable super earnings, which is the portion of earnings tied to the extent your total super balance exceeds the large super balance threshold.
Key settings for 2026-27:
The $3 million super tax is not a tax on your property itself, which surprises many Division 296 SMSF property owners.
Your SMSF works out its Division 296 fund earnings, an adjusted amount of the fund’s taxable income, and then attributes a portion to each member who is in scope.
That means rent, and any gain when the fund sells a property, can feed into the earnings figure. The ATO says an actuary is generally needed to work out the attributable amount for each member.
No. The ATO says limited recourse borrowing arrangement (LRBA) amounts are disregarded when calculating your total super balance for Division 296.
For Division 296 SMSF property owners with a loan, that matters. Your balance for this test is not increased by the LRBA amount, so check the figure with your accountant rather than assuming the gross property value applies.
The Division 296 CGT adjustment lets an SMSF reset the cost base of its CGT assets to their market value at the end of 30 June 2026. The reset applies only when calculating Division 296 fund earnings, not for the fund’s normal tax.
The ATO’s rules for the election:
If your fund makes the CGT adjustment, it needs the market value of each asset at the end of 30 June 2026. For Division 296 SMSF property, that usually means a property valuation as at that date.
The ATO page does not say who must provide the valuation. Ask your accountant and SMSF administrator what evidence they need before the 2026-27 annual return is due.
The ATO lists these SMSF tax changes for 2026-27 as trustee tasks:
Division 296 tests each member’s own total super balance, not the fund’s total. Take a couple who each hold $1.6 million in the same SMSF. The fund holds $3.2 million, but neither member is above $3 million, so neither is in scope.
Now take a member with a total super balance of $3.4 million at 30 June 2027. They are above the threshold, so a portion of their share of the fund’s Division 296 earnings is taxed at the extra 15%.
Work through this Division 296 SMSF property checklist with your accountant:
These are the errors to avoid:
The ATO says notices of assessment for 2026-27 will be issued in the latter half of 2027-28. The tax is assessed to the individual and can generally be paid from your super fund.
With property, liquidity matters. If most of your fund sits in a single Perth property, plan how the fund will hold enough cash for loan repayments, running costs and any Division 296 tax.
It can change the numbers, but it does not change the borrowing rules. Most members are well below $3 million, and reporting at the bills’ passage put the number affected at less than 0.5% of Australians in 2026-27.
If you are near the threshold, model Division 296 SMSF property scenarios with your accountant before buying. Our SMSF loan guide for Perth property purchases explains the LRBA rules, and our article on capital gains tax changes in 2027 covers the wider tax picture.
We arrange the lending, not the tax advice, but Division 296 SMSF property questions often come up when trustees review a loan. Our team works alongside your accountant and SMSF administrator so the loan structure fits your fund and your timeline.
If you are reviewing an existing SMSF loan or planning a purchase, start with our SMSF mortgage broker in Perth page, or read about commercial property loans in Perth if your fund is buying business premises.
Division 296 applies from 1 July 2026, covering the 2026-27 financial year and later years. The laws passed Parliament in March 2026.
The tax is assessed to you as the member. Your SMSF calculates and reports the relevant super earnings, and the ATO says the tax can generally be paid from your super fund.
The ATO says LRBA amounts are disregarded when calculating your total super balance for Division 296. Check your exact figure with your accountant.
No. The election covers all CGT assets the fund holds at 30 June 2026, and it cannot be revoked once made.
It must be made by the due date of the fund’s 2026-27 SMSF annual return, in the form the ATO approves.
The ATO expects to issue 2026-27 notices of assessment in the latter half of 2027-28.
Related Resources from Strawberry Finance:
The information in this article is general in nature and does not take into account your objectives, financial situation or needs. It is not tax, legal or financial advice. Strawberry Finance is a credit assistance provider and is not a registered tax agent. For advice about your own tax position, consult your accountant, SMSF adviser or a registered tax agent, or refer to ato.gov.au. Sahil Saini is an authorised Credit Representative (no: 526177) of ratesonline.com.au Pty Ltd (ACN 122 052 582), Australian Credit Licence 384404. Lending is subject to lender credit criteria, terms, conditions and fees. Correct as at November 2026.
