A senior superannuation executive has identified a number of capital gains tax (CGT) issues that remain unresolved with the amended version of the proposed Division 296 impost, including how discounting will be treated, as well as the fate of asset gains accrued prior to 1 July 2026.
“The treatment of capital gains and losses under this revised framework remains uncertain. At the moment we know that super funds are entitled to a one-third CGT discount on assets held for more than 12 months. Although the government indicated that the revised measure will align with existing taxable income principles, it hasn’t confirmed whether the CGT discount will continue to apply to realised gains,” Institute of Financial Professionals Australia head of technical services Natasha Panagis told attendees of a technical webinar held last week.
Further, Panagis acknowledged there is no certainty either regarding the treatment of both current and prior-year capital losses.
“[As such], the final calculation may not allow losses to [be offset against] realised gains, meaning that the measure could be based on grossed realised gains rather than net taxable gains,” she explained.
According to Panagis, there is likely to be an asset cost-base reset at 1 July 2026, much like the one implemented with the introduction of the transfer balance cap, and this will have implications for trustee strategies.
“If this happens, it will reduce the incentive for SMSFs to sell assets prior to 30 June 2026,” she said.
“But what remains unclear is how pre-1 July 2026 capital gains will be treated. Specifically, we don’t know whether affected members will be required to immediately pay CGT on pre-1 July 2026 capital gains subject to the lower 10 per cent tax rate.
“Or will they be permitted to defer that tax liability until the asset is eventually sold?”
She noted the Morrison government did allow for the deferral of CGT liabilities when the transfer balance cap-triggered cost-base reset occurred.
“We could see Treasury considering a comparable approach under Division 296, but we need to wait and see,” she said.
