The ATO has reminded SMSF auditors the commencement of the Division 296 tax regime has not changed any of their obligations to flag issues within a fund, but rather made them more critical for the calculation of the new impost.
In an update on its website, the ATO pointed out the Division 296 rules contained in the Better Targeted Super Concessions legislation started on 1 July 2026 and would apply from the 2027 financial year onwards.
The regulator reiterated fund members with a total superannuation balance (TSB) above the large super balance threshold of $3 million will be subject to an additional 15 per cent tax on the proportion of earnings relating to their TSB exceeding that threshold, and those with TSBs above the very large super balance threshold of $10 million will also be subject to a further 10 per cent impost on the proportion of earnings exceeding this second threshold.
While these additional taxes were a matter for superannuants, it added the obligations of auditors for accurate reporting have not been reduced and would support any Division 296 calculations.
“When auditing an SMSF, check that sufficient and appropriate audit evidence supports the market value reported for each fund asset, [and] trustees have allocated investment returns to members on a fair and reasonable basis,” it stated, pointing to the relevant regulatory obligations.
“Regulation 8.02B of the Superannuation Industry (Supervision) Regulations 1994 (SISR) requires trustees to value SMSF assets at market value when preparing the fund’s accounts and statements.
“If you cannot obtain sufficient and appropriate evidence, consider whether you need to modify the independent auditor’s report (IAR) and lodge an auditor contravention report (ACR) where the reporting criteria are met.
“Regulation 5.03 of the SISR requires trustees to determine investment returns credited or debited to members’ benefits on a fair and reasonable basis.
“If the fund does not meet this requirement, consider whether you need to modify the IAR. Regulation 5.03 is not reportable for ACR purposes, although you may include other relevant concerns in section G of the ACR.”
The SMSF Association welcomed the ATO update, stating it “provides a timely reminder that obtaining sufficient and appropriate evidence to support market valuations and ensuring investment returns are allocated to members on a fair and reasonable basis will take on increased significance in the Division 296 environment”.
“As a member of the ATO’s Division 296 working group, the association welcomes the ATO’s ongoing engagement and acknowledgement that there are a number of technical and practical issues that still require further clarification,” the industry body said.
Jason Spits
SENIOR JOURNALIST
Jason is a senior journalist with Benchmark Media and writes for the selfmanagedsuper website and magazine and smstrusteenews website. He has covered financial services since 1999 and has written about life insurance, superannuation, investment management and financial advice, in both a freelance and in-house capacity, and also did a brief stint as a media manager for an industry association. He has been the editor of trade titles Money Management and Financial Standard, and was most recently senior journalist with life insurance title Riskinfo.
Articles by Jason