The SMSF Association has recognised the anticipated changes to the SMSF annual return (SAR) in order to accommodate Division 296 reporting and the instructions pertaining to them are presenting a conundrum for trustees.
“There will be some changes made to the SAR to accommodate the reporting of [Division 296] earnings. It will not be compulsory [to] report members’ earnings, but we do expect there to be a new box or new field to be inserted probably [in the] members’ section report,” association chief executive Peter Burgess told attendees of the SMSF Association Technical Summit 2026 held in Sydney recently.
“It will possibly be called relevant Division 296 earnings.”
Burgess pointed out this will likely lead to other necessary amendments being made to S2, “Retirement phase account balance – non CBDIS”, and S3, “Retirement phase account balance – CBDIS” in the “Other transactions” section of the SAR.
According to Burgess, though, the rules around the new Division 296 reporting will present a dilemma for trustees now and in the future.
“As I said, it is not going to be made compulsory that you report this [Division 296 earnings] figure for [fund] members. [In response to this fact], our first reaction was probably don’t report it because if you do report it on here, it’s going to result in a determination being issued sooner than would otherwise be the case,” he said.
“But of course, it’s nice and neat if you do report it because you’re doing your end-of-year work [and] you can get it out of the way.
“If you don’t report it you run the risk that the determination is going to be issued in the future, [meaning] you’re going to have to go back and reopen the fund and rework this. So yes there are reasons as to why you might want to report it.
“But the ATO has pointed out if you have a member of a fund [whose total super balance] is over $3 million, you are going to have to report [the Division 296 earnings] because if you don’t, you [will have] made a false declaration.
“So look out for changes to the SAR.”
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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