A senior sector stakeholder has confirmed SMSF trustees will not receive any dispensation from a Division 296 tax payment on unrealised capital gains when assets captured by the impost are sold and the item’s appreciation is realised.
Accurium head of SMSF education Mark Ellem indicated the method by which the new tax on total super balances over $3 million will be implemented means trustees captured by it will effectively be charged twice for the increase in the value of fund assets because no capital gains tax (CGT) credit can be applied to the original liability issued.
“The Division 296 tax is a levy that is imposed on the individual and not the fund. Therefore, there are two separate taxpayers involved,” Ellem told attendees of the SMSF Professionals Day 2025 online component co-hosted by selfmanagedsuper and Accurium yesterday.
“So under the proposed measure the individual will be levied with the Division 296 tax, which is calculated based on superannuation ‘earnings’ that includes the unrealised value of assets.
“However, when the fund sells the asset, it makes the capital gain and will pay tax on that capital gain.
“So we have two different taxpayers and one taxpayer can’t transfer a credit to another taxpayer. It means unfortunately there will be no tax credit available in these circumstances.
“There will be tax assessed to the individual under the Division 296 tax if the value has gone up in value on paper, as per the calculation of superannuation ‘earnings’, and then the fund will pay tax on the actual capital gain in the year the CGT event occurs.
“You might think of that as double tax, but the measure is in relation to two separate taxpayers. That’s what you have to keep in mind.”
