QUARTER IV 2025 | ISSUE 052 | THE PREMIER SELF-MANAGED SUPER MAGAZINE
The
DIVISION
296 REBOOT
FEATURE
COMPLIANCE
STRATEGY
COMPLIANCE
Revised Div 296 What has changed
Part A qualifications Key audit element
Property developments Optimum structures
Wholesale investor test Where SMSFs stand
COLUMNS Investing | 20 The private credit opportunities.
Investing | 24
The
DIVISION
296 REBOOT
The modern-day gold rush.
Compliance | 28 Part A audit qualifications and their significance.
Strategy | 32 Intricacies of the death benefit payment process.
Compliance | 36 When the GST becomes relevant.
Strategy | 40 Property development investment structures.
Compliance | 44 Where SMSFs sit regarding the wholesale investor test.
Compliance | 48 Considerations for payday super.
Compliance | 52 In-house asset factors to take into account.
Strategy | 56 The role specialised legal advice can play.
REGULARS THE DIVISION 296 REBOOT Cover story | 12
FEATURE
What’s on | 3 News | 4 News in brief | 5 SMSFA | 6 CPA | 7 IFPA | 8 CAANZ | 9 IPA | 10 Regulation round-up | 11 Super events | 60
ASIC Report 824 | 16 A proper analysis and reflection.
QUARTER IV 2025 1
FROM THE EDITOR DARIN TYSON-CHAN INAUGURAL SMSF ASSOCIATION TRADE MEDIA JOURNALIST OF THE YEAR
Whacking superannuants twice Up until now, the funding of the Compensation Scheme of Last Resort (CSLR) has been seen as a serious issue the financial advice sector has had to deal with. This concern has been going on for a while, but took an even more severe turn when the government confirmed recently the CSLR special levy for 2025/26 would be $47.3 million, with $10.4 million to be paid by the financial advisory industry – and that is before any contingencies are made for the Shield and First Guardian master fund collapses. However, Assistant Treasurer and Minister for Financial Services Daniel Mulino further inflamed the situation when he suggested at a recent roundtable both industry and retail superannuation funds would also have to cover off some of the levy. This led to very strong pushback from several industry bodies, such as the Association of Superannuation Funds of Australia and the Super Members Council (SMC). And you guessed it, one of the gripes was if we are going to be hit, then why should SMSFs not face the same predicament. In an Australian Financial Review article, SMC chief executive Misha Schubert was quoted as saying it “defies logic the government would be asking low-income Australians to pick up the tab, while high net wealth SMSF holders don’t have to lift a finger”. Congratulations minister, I think we can safely say you’ve reignited the superannuation sector war. And Mulino himself has admitted it is something he is going to have to consider. On the surface, it seems ridiculous for SMSF trustees who had nothing whatsoever to do with collapsed investment schemes to be asked to fund the compensation for unfortunate individuals who lost money as a result of
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partaking in those offerings. While I cover the SMSF sector and thus have an interest in it, I’m going into bat for all superannuants here. Frankly, why should any super fund be dragged into funding the CSLR at all? What’s it got to do with them? Making super funds pay for a portion of the CSLR levy will only penalise members and will introduce an element that erodes their retirement savings, particularly when the majority probably steered clear of these products. I could understand punitive action taken against certain funds if it was found their trustees had a deep involvement in channelling monies into the collapsed investment schemes, but this is not the case. And we know why this is happening. The government’s gaze just can’t be averted from the $4.3 trillion held in superannuation and the potential problems it could be used to fix. But this is ridiculous and it basically means superannuants will be hit twice – once via their taxes because the government will have to fund some of the CSLR levy and one more time as an individual fund member. How is that fair? It’s time for Canberra to step up and wear the big-boy pants here on two fronts. Firstly it has to come to the realisation the CSLR should be government funded and, secondly, it is time for the regulators to exact compensation from those responsible for this situation and they are the product providers. Until then there can be no prevention and we all know prevention is better than cure, especially this one. I’d also like to announce this will be the final edition of selfmanagedsuper in this format. The content we have been bringing you via the magazine will continue, but will now be incorporated within our other publishing activities.
Editor Darin Tyson-Chan darin.tyson-chan@bmarkmedia.com.au Senior journalist Jason Spits Journalist Penny Pryor Sub-editor Taras Misko Head of events and corporate partnerships Cynthia O’Young c.oyoung@bmarkmedia.com.au Publisher Benchmark Media info@bmarkmedia.com.au Design and production AJRM Design Services
WHAT’S ON Accurium Inquiries: 1800 203 123 or email enquiries@accurium.com.au
Kickstart 2026 21 January 2026 Webinar 2.00pm-3.15pm AEDT
SMSF administration in practice 28 January 2026 Webinar 2.00pm-3.15pm AEDT
SMSF transfer balance cap: reporting and 2026 indexation 4 February 2026 Webinar 2.00pm-3.15pm AEDT
Investment rules for SMSFs 4 March 2026 Webinar 2.00pm-3.15pm AEDT
SMSF investment rules in action 11 March 2026 Webinar 2.00pm-3.15pm AEDT
SMSF member death: what to do next
To have an upcoming event featured on the What’s On page, please contact darin.tyson-chan@bmarkmedia.com.au.
Institute of Financial Professionals Australia Inquiries: 1800 203 123 or email info@ifpa.com.au
Super Discussion Group 10 February 2026 Webinar 12.00pm-2.00pm AEDT
NSW 10 February 2026 6.00pm-8.00pm AEDT Karstens Level 1, 111 Harrington Street, Sydney
VIC 12 February 2026 6.00pm-8.00pm AEDT The Veneto Club 119 Bulleen Road, Bulleen
2026 Super quarterly update 5 March 2026 Webinar 12.30pm-1.30pm AEDT
2026 Annual Conference 19-20 March 2026 Crown Melbourne 8 Whiteman Street, Southbank
SMSF Association
SMSF investment rules in action
SMSFA National Conference 2026
Inquiries: events@smsfassociation.com
18-20 February 2026 Adelaide Convention Centre North Terrace, Adelaide
DBA Lawyers
Inquiries: 1300 959 476 or email team@smartersmsf.com
Inquiries: dba@dbanetwork.com.au
State of SMSF 2026
13 February 2026 Webinar 12.00pm-1.30pm AEDT
Changing face of SMSF 4 March 2026 Webinar 12.00pm-1.00pm AEDT
SMSF clinic 3 March 2026 Webinar 1.30pm-2.30pm AEDT
Super in 60 5 March 2026 Webinar 2.00pm-3.00pm AEDT
Institute of Public Accountants Inquiries: 1800 625 625 or email cpd@publicaccountants.org.au
2026 Victoria Conference 12-13 March 2026 RACV Torquay Resort 1 Great Ocean Road, Torquay
SMSF Professionals Day 2026 Inquiries: Cynthia O’Young (02) 8973 3317 or email events@bmarkmedia.com.au
19 May 2026 Sydney Masonic Centre 66 Goulburn Street, Sydney
VIC 21 May 2026 Melbourne Convention and Exhibition Centre 1 Convention Centre Place, South Wharf
QLD
Smarter SMSF
28 January 2026 Webinar 12.00pm-1.00pm AEDT
Inquiries: 1300 433 376 or email events@heffron.com.au
NSW
25 March 2026 Webinar 2.00pm-3.15pm AEDT 11 March 2026 Webinar 2.00pm-3.15pm AEDT
Heffron
25 May 2026 Brisbane Convention and Exhibition Centre Grey Street, South Brisbane
SMSF online updates
13 March 2026 Webinar 12.00pm-1.30pm AEDT
QUARTER IV 2025 3
NEWS
Div 296 implementation must be neutral By Darin Tyson-Chan
System neutrality is the one element the SMSF Association would like to see with regard to the implementation of the proposed Division 296 tax. The SMSF Association has called for complete system neutrality with regard to the implementation issues superannuation funds will inevitably face when the Division 296 tax is introduced on 1 July 2026. SMSF Association chief executive Peter Burgess acknowledged the new measure will mean additional administrative responsibilities for super funds, likely to include adjustments for
items such as assessable contributions and exempt current pension income. “We do expect there will be a need for [administrative] system changes, particularly for the large funds, but also for self-managed super funds as well. There may be changes made to the SAR (SMSF annual return) with new labels and so forth,” Burgess indicated during a recent webinar hosted by selfmanagedsuper. “What we’re looking out for very carefully is to make sure we have system neutrality. We understand that the large funds do face some issues when it comes to adjusting cost bases, but we don’t want the large funds getting preferential treatment. “There has to be system
neutrality and that’s what I’m mostly concerned about at the moment.” He reiterated Treasurer Jim Chalmers has so far made it clear he is not considering any amendments to the revised policy he announced in October, despite having his attention drawn to some of the difficulties with its implementation. “The point I was trying to make to the Treasurer is this is the reason that we didn’t go down this track to start with because it’s a complicated process for the large funds in particular,” he said. “The superannuation system is not designed for a tax like this. Superannuation funds are designed to calculate the taxable income at a fund level
Release authority compliance causing ATO angst By Darin Tyson-Chan
The ATO has revealed it is still seeing issues regarding compliance with release authorities and confirmed ignoring this part of an SMSF withdrawal procedure can lead to drawdowns being categorised as illegal early access of benefits. “Release authorities are a big issue for us. Unfortunately, a lot of trustees will get their Div 293 tax assessment or their excess concessional contribution tax assessment [and] they’ll immediately pay it from the SMSF before they have received a release authority from us. This is a breach of the rules and can result in them being subject to administrative
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penalties,” ATO director Kellie Grant told practitioners at The Tax Institute National Superannuation Conference held in Sydney recently. “That can actually be an issue as well with illegal early release in those sort of situations as well.” To this end, Grant pointed out advisers should communicate firmly with their clients when they know these circumstances are likely to arise to ensure those trustees comply with ATO release authorities. “I think the message there would be as soon as you’ve got a client you know is going to have Div 293 tax or excess contributions tax, put them on notice [and tell them] do not release any money from your fund to pay a debt until such
and when you’re asking for the funds to do that down to a member level, it creates a lot of problems. “Not really for self-managed super funds, but mainly for the large funds that will have to make some reasonable changes to their systems to accommodate this tax. “In our view there are simpler ways to go about it.”
Peter Burgess
time as the ATO sends you that release authority,” she suggested. She also took the opportunity to stress another aspect of the release authority to which SMSF trustees need to pay particular attention. “If we send you a release authority via SuperStream, you need to pay that release authority via SuperStream and notify the commissioner that it has also been paid for via SuperStream,” she indicated. “That is definitely something that is compulsory right now and most funds are set up with electronic service addresses these days so should be able to meet those standards.” However, she recognised some release authorities are delivered outside of the SuperStream system. “Sometimes we do send releases via paper and if that’s the case, you can comply with that release authority by paper,” she said.
NEWS IN BRIEF
Caps to increase in 2026 A senior industry executive has predicted the superannuation contribution thresholds will have the indexation measure applied to them once more on 1 July 2026. “So the concessional contribution cap is expected to index to $32,500, which means the non-concessional cap will index to $130,000,” BT head of financial literacy and advocacy Bryan Ashenden forecast. “Those [figures] are based on movement in AWOTE (average weekly ordinary time earnings) and the most recent movements that were published. [These figures] have already put us above the threshold we need to get to for those caps to index. “Technically we actually have to wait for the figures to be released, they come out in early February, around AWOTE to get the official confirmation because it is based on a particular quarter, but again for them to not index you’d actually have to see wage growth go backwards, which we think is highly unlikely. “So while we say it’s not guaranteed yet, it is pretty much expected that we will see the indexation of those caps from 1 July 2026.”
Trustee bannings down The number of trustees disqualified by the ATO has fallen in the second half of this year and is also lower than the same period last year, according to new data released by the regulator. The most recent update to the Disqualified Trustees Register, which came out at the end of November, indicates 128 individuals were
disqualified for the quarter ending 30 September 2025, while a further 73 people were disqualified from 1 October to 5 December based on notices published on the Federal Register of Legislation, for a total of 201 disqualifications. Of that number, it appears at least 50 people were banned alongside their spouse, with 25 couples appearing in the register based on residential details and banning dates. The Disqualified Trustees Register indicates that figure is lower than the first half of this year, in which 246 trustees were disqualified, and a further decrease on the second half of 2024 when the tax commissioner disqualified 271 trustees, and a further 285 trustees in the first half of last year.
CSLR threatens adviser numbers The Financial Advice Association Australia (FAAA) has expressed its concerns the special levy for the Compensation Scheme of Last Resort (CSLR) could see more financial planners leave the industry if the current allocation system is continued past the 2026 financial year. “I’m genuinely concerned that it will accelerate departures in our sector ... when you’re a small business, which most adviser firms are, if you’ve got three or four advisers, for some businesses, this could wipe out their profit. It really is meaningful for us, in a way that for some of the larger sectors with large institutions, it’s a rounding error for them,” FAAA chief executive Sarah Abood told attendees of an endof-year wrap-up webinar for FAAA members. At a roundtable meeting with industry stakeholders, Minister for Financial Services Daniel Mulino announced the $47.3 million CSLR
special levy for 2025/26 would be spread across all 23 retailfacing subsectors, with the largest allocation of 22 per cent, or $10.4 million, going to the financial advice sector. For 2025/26, the FAAA has calculated the action would equate to an extra cost of $700 per adviser, bringing their total annual expense for the levy for this year to over $2000 per adviser.
New scam prevention app SMSF practitioners and members have been encouraged to download and use a new ATO app allowing them to lock down their fund in the event of suspicious activity without needing to contact the regulator first. ATO SMSF director Kellie Grant said the revised app was a key tool that worked in conjunction with alerts issued by the regulator to help protect funds from attempts to defraud money from trustees and members. “What we find is SMSFs are increasingly, unfortunately, being targeted by fraudsters and scammers due to the large sums of money held in them, so the ATO has implemented additional identity checks and protective alerts to safeguard SMSFs,” Grant explained. “We conduct additional identity checks when a fund is first established and issue protective alerts when there are changes to the fund’s details or when a new member is added. “The changes to a fund’s details that activate an alert are change of address, phone number and bank account details as they can be an early warning of identity fraud, which is why we try to confirm any of those changes made are correct as soon as possible.”
QUARTER IV 2025 5
FEATURE
The
DIVISION
296 REBOOT
News of changes to the Division 296 tax has been welcomed, but like its first iteration, questions remain about its operation and, as Jason Spits writes, also its deeper impact on the superannuation system.
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FEATURE DIVISION 296 REBOOTED
In February 2026, the proposed Division 296 tax will celebrate its third anniversary of being a key superannuation and tax policy central to the fiscal goals of a government that has been unable to get it through parliament despite strongly prosecuting its case. It will also create a sense of deja vu in which the superannuation system, including the SMSF sector, will have had to quickly digest Treasury proposals for an additional tax on earnings in super above certain thresholds. Of course, the key difference is none of it will be new ground, but rather an area that has been fiercely contested, resulting in, depending on who you ask, a massive backdown by the government or a good, albeit very slow, response to problems with the tax first presented in 2023. While it is too early to dig deep into the revised version of the tax (see: How we got to this point) the shift away from levying the tax on unrealised gains to realised earnings is effectively a reset of the impost. Welcome news Given its previously oversized impact on SMSFs, is it a win for the sector? Colonial First State head of technical Craig Day believes it is and notes the shift from taxing unrealised gains to realised earnings or income has been universally welcomed despite the lack of information on how this will be calculated. “It is a win because taxing paper profits was not a good tax policy and while the initial tax calculations are now gone, because they were so flawed, it was a simple method for working out the tax that required much
less reporting by the super sector,” Day says. SMSF Association chief executive Peter Burgess was one of those who welcomed the decision to revise the Division 296 tax, noting its particular impact on the SMSF sector. “This is a win because the severity of the tax has been reduced, especially for SMSFs, of which 17,000, such as small business and primary producers, hold business premises in their funds and faced problems immediately if a member has more than $3 million in super,” Burgess notes. “We welcomed the change because it was what we were asking for from day one of this tax being announced.” Soft cap surprise What was not sought was the addition of a second threshold at $10 million where the tax would be ramped up to 25 per cent, and given these caps carry no forced obligation to leave super, Day sees it as an expansion of the revenue-gathering plans inherent in the first version of Division 296. “You could view it as a soft cap or extra tax take because the new version of the tax aims to recoup revenue just like the original proposal did, but it may work as a soft cap depending on the assets held by a super fund member,” he explains. “For example, unrestricted, nonpreserved benefits could be moved out because you can get lower tax elsewhere, such as in a family trust, but capital gains tax will arise if those assets are moved.” Heffron managing director Meg Heffron doesn’t regard the twin thresholds as stealth soft caps and points out there is a lower, more effective cap regime already in place.
“We have had caps in place since 2017 via the transfer balance caps and unlike the old reasonable benefit limit regime, what we don’t have is compulsory cashing,” Heffron says. “What we will have with the TBC and Division 296 is a cap and a way to claw back tax concessions on superannuation, but the revised tax may encourage some people to exit the super system, but will not force it.” Burgess notes the addition of the higher threshold represents an even more targeted element of the new impost, but still ties into a long-standing stated aim of the government to generate revenue for budget repair. “Even at $3 million and $10 million, super funds members are still getting tax benefits, but the government is aiming for additional tax revenue with the new threshold given the amount it will collect, based on the forward estimates, drops from $6 billion to $2 billion, partly because of the delay caused by these changes,” he states. Policy remains as calculations change Many of these macro-policy outcomes may have been forgotten in the push to have Division 296 based on realised income rather than paper profits, but a significant structural shift will still take place in superannuation once it is introduced. Heffron suggests any shift in the longterm treatment of large balances should be expected and changes will reflect current aspects of the system. “Tax policy has to evolve, but it has to be fair to the people in the system. Many people feel better about the revised Continued on next page
“It is a win because taxing paper profits was not a good tax policy and while the initial tax calculations are now gone, because they were so flawed, it was a simple method for working out the tax that required much less reporting by the super sector.” – Craig Day, Colonial First State
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