An SMSF specialist has suggested the trustee strategies with regard to Division 296 tax minimisation must be considered using the wider circumstances of the fund rather than narrowly looking at the impost itself.
To this end, Smarter SMSF technical and education manager Tim Miller indicated many factors of a client’s situation require assessment before a calculation of the material effect the new tax will have on the individual should commence.
One critical element Miller identified that needs determining before any Division 296 tax comparison calculations is the age and health of the person in question.
Specifically, he noted if the life expectancy of the member is short, the cumulative cost of the Division 296 tax may be modest when compared to the advantage of retaining the relevant benefits inside the superannuation environment.
According to Miller, estate planning was another relevant factor requiring attention before a Division 296 comparative calculation is made.
He pointed out an evaluation needed to be made as to whether the estate planning arrangements in place, for example, through an SMSF binding death benefit nomination, are more efficient when compared to the strategy that would have to be set up externally to the superannuation environment to replicate this desired outcome.
The types of SMSF assets involved should also be considered, such as the holding of property under a limited recourse borrowing arrangement (LRBA), he noted. Here, he recognised the Division 296 conversation should contemplate the complicated nature of unwinding the LRBA before the property could be held externally to the fund.
He also acknowledged some of the recent budget announcements, such as the scrapping of the 50 per cent capital gains tax discount, will now play a part in the formation of Division 296 action plans.
“[The Division 296] conversation needs to be more than just the tax piece and [there are some particular] questions identified as being worthy of asking clients in these situations,” he told delegates at the SMSF Association Technical Summit 2026 in Sydney today.
Darin Tyson-Chan
Editor
Darin is the founder and publisher of Benchmark Media, an independent publishing house whose mastheads include financialobserver, selfmanagedsuper and smstrusteenews. He has been covering the financial services space for over a decade and in this time he has worked for a variety of trade publications. Darin has also written for the Money section published in The Sydney Morning Herald and The Age.
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