Australia Tax Update: Standalone Form Confirmed for Division 296 Cost-Base Elections

by Ariful | Oct 24, 2026 | Australia Updates

TITLE: Division 296 CGT Cost-Base Adjustment Election: What Australian SMSF Trustees Need to Know

Separate form gives trustees more flexibility

Australian SMSF trustees now have greater clarity on how to make the one-off Division 296 CGT cost-base adjustment election. It will use a dedicated form, separate from the SMSF annual return. The form is not yet available, so your priority is to prepare the records and evidence needed to make an informed decision when it is released.

Speaking at The Tax Institute National Superannuation Conference in Melbourne on 22 October 2026, Jemma Sanderson of Cooper Partners confirmed that the election will be made through a standalone ATO form, not through the SMSF annual return. She described this as “a really good outcome”, particularly for trustees who lodge their annual return late.

As reported by SMS Magazine, the election can be made independently of the fund’s 2026/27 return. That gives trustees a separate opportunity to complete the election by the relevant lodgment due date, even if the annual return is not ready.

The ATO has not yet released the dedicated form. Once available, the election can be made up to the lodgment due date for the 2026/27 income year. The form is to be retained in the fund’s records, rather than sent to the ATO. Expect the SMSF auditor to request a copy.

Understand what the election changes

The one-off election allows an SMSF to reset the cost base, or reduced cost base, of its CGT assets to market value at 30 June 2026 for calculating future Division 296 fund earnings.

The election applies to all relevant CGT assets held by the fund at that date. You cannot select only the assets that appear favourable. Once made, it is irrevocable.

That makes this a whole-of-fund decision, not a formality. Resetting values may reduce the effect of gains that accrued before 1 July 2026, but the result depends on the fund’s asset mix, unrealised gains and losses, members’ circumstances, and likely future transactions. Obtain appropriate advice before deciding; an all-assets adjustment may not produce a favourable outcome for every SMSF.

A fund may make the election even if no member currently exceeds the $3 million threshold. That could matter if a member’s total superannuation balance may rise above the threshold in a future year.

Check who may be affected

Division 296 tax applies to individuals, not directly to the SMSF. However, trustees may still need to calculate the fund’s Division 296 earnings, attribute them to members in scope, and report relevant information to the ATO if requested.

For 2026/27, the relevant test is a member’s total superannuation balance on 30 June 2027. Under the rules described in the SMS Magazine feature on preparing for Division 296, individuals above $3 million may face an additional 15% tax on the portion of taxable super earnings attributable to balances over the threshold. A further 10% applies to the component corresponding to balances above $10 million. Both thresholds are subject to indexation.

Do not assess members using their SMSF balance alone. Total superannuation balance can include interests in other Australian super funds, including APRA-regulated funds and certain reversionary or successor income stream interests. A member below $3 million in your SMSF may still be in scope when their other interests are counted.

For later income years, Division 296 may apply if a member’s balance exceeds the relevant threshold immediately before the year begins or at its end. Review the ATO’s Division 296 guidance for SMSFs and keep members’ circumstances under review.

Use this trustee checklist now

You do not need to wait for the form to start preparing. Take these steps to support a timely, well-documented decision:

1. Identify potentially affected members. Ask members to consider their total superannuation interests across all Australian funds. This helps you spot exposure that may not be visible in the SMSF’s own records.
2. Complete 30 June 2026 valuations. Gather evidence for assets whose market value may be difficult to establish later.
3. Document your valuation method. Record the information considered, the valuation approach and the basis for the value at the relevant date.
4. Assess every CGT asset together. Model the all-or-nothing election across the fund’s asset mix before choosing whether to proceed.
5. Keep the election and supporting records. Once the ATO releases the form, retain the completed election and relevant cost-base calculations with the fund’s records for audit.

The ATO has identified market valuations as an area of focus for SMSF auditors in 2026/27. Property, private companies, trusts, collectables and other unlisted investments may require particular attention. Retain reasonably available evidence that supports ownership, existence and market value. Delays can make it harder to reconstruct the position at 30 June 2026 or obtain evidence created close to that date.

This is an execution window: gather member information, complete the valuation work and establish the records now, while the relevant date is recent. For related Australian SMSF compliance coverage, read our update on the ATO’s refreshed SMSF borrowing rules for business real property.

FAQs

What is the Division 296 CGT cost-base adjustment election?

It is a one-off election that allows an SMSF to use the 30 June 2026 market value of its CGT assets as their cost base for calculating future Division 296 fund earnings. It applies across the fund’s relevant assets and cannot be revoked.

How is the election made?

The election will be made on a standalone ATO form, separate from the SMSF annual return. The ATO has not yet released the form. The completed form is kept in the fund’s records rather than lodged with the ATO, and the auditor may ask to see it.

Can a fund elect if no member is currently above $3 million?

Yes. A fund may make the election even if no member currently exceeds the threshold. Consider the fund’s assets and members’ potential future circumstances before deciding.

What should SMSF trustees do now?

Identify members who may be in scope, gather information about their other super interests, complete 30 June 2026 valuations, preserve supporting evidence and assess the election’s whole-of-fund effect.

Sterlinx Global operates as a Global Tax Compliance Suite, delivering ongoing bookkeeping, tax calculations, lodgments and year-end filings. You provide your data; we support compliance execution through a structured process. Contact us to discuss your compliance needs.

Australia Tax Update: ATO Puts Content Creators on Notice Over Undeclared Income

by Ariful | Oct 22, 2026 | Australia Updates

ATO turns its attention to content creators

Australian content creators, influencers and online businesses should review how they record income and non-cash benefits. In a media release today, the Australian Taxation Office (ATO) warned that payments and perks from social media, streaming, podcasting and other online platforms may create tax obligations, even if you think of your content activity as a side hustle.

ATO Assistant Commissioner Anita Challen said creators can be caught off guard when the ATO identifies undeclared income through platform data-matching, lifestyle assets programs or community tip-offs. That can lead to an unexpected audit.

“If you’re creating content and getting paid, whether in cash, products or experiences, you’re probably in business for tax purposes,” Challen said. She also warned that audience growth can outpace record keeping and tax understanding.

Here’s what to check now.

Record every way your content earns

Your income may be more than the money deposited into your bank account. The ATO says it can include:

• Advertising and platform payments
• Sponsorships and affiliate links
• Tips, donations and subscriptions
• Free products, services or experiences received in exchange for promotion

If a brand gives you a product because of your content, it generally needs to be declared at its market value. The same principle can apply to services or experiences received as part of a promotional arrangement.

“Free doesn’t mean tax-free. If it’s part of how you earn, it needs to be recorded,” Challen said.

Keep contracts, emails, platform statements and details of non-cash benefits. Record what you received, when you received it, and why. This gives you a clearer picture of your income and helps support accurate reporting.

Read the ATO’s 22 October media release for its full summary of the announcement.

Check whether your activity is a business

A large following does not automatically decide whether you are running a business. Nor does calling your content a hobby settle the question. The ATO’s draft ruling, TR 2026/D2: Income tax: carrying on a business by an individual, discusses indicators that may help distinguish a business from an investment or hobby.

These include:

• Whether you have a commercial purpose and intend to make a profit
• Whether there is a reasonable prospect of profit
• Whether you organise the activity in a business-like way
• The activity’s size and scale
• How regularly and repeatedly you carry it out

No single indicator is decisive. Consider the overall pattern of your activity, including how you plan, promote and earn from your content. The draft ruling is open for consultation until 27 November 2026. The ATO says the proposed final ruling would apply to periods both before and after its date of issue.

For the ATO’s practical overview, read Are you in the business of content creation?.

Review GST and reporting obligations

The ATO says content creators may need to register for GST if they meet certain criteria. Do not assume that income tax and GST rules are the same. Check the current ATO requirements for your circumstances and take action if you meet the registration criteria.

The ATO has also released a creator-focused Essentials to strengthen your small business course. It covers when content creation may become a business, income to declare, record keeping and the consequences of not meeting tax obligations.

Build a simple compliance routine

Make record keeping part of your regular workflow. A practical starting checklist is:

1. Collect platform records. Download payment statements and keep details of advertising revenue, subscriptions, tips and donations.
2. Track brand arrangements. Save sponsorship and affiliate agreements, invoices and correspondence.
3. Value non-cash benefits. Record products, services or experiences received for promotion, including their market value.
4. Keep expense evidence. Retain receipts and note how each cost relates to your content activity.
5. Apportion mixed-use costs. If an expense is used privately as well as for business, separate the business portion. Deductions may be available where you carry on a business, but private use must be appropriately apportioned.
6. Review your position regularly. As your audience, income or activity changes, revisit whether you may be carrying on a business and whether additional obligations apply.

Good records make it easier to report accurately and identify gaps before they become bigger problems.

The ATO’s announcement reinforces that creator income is now on its compliance radar. For continuity, see our 20 October Australia tax update on the ATO’s extension of interest relief for family trust tax liabilities.

Sterlinx Global provides a Global Tax Compliance Suite for businesses, including Australian entities. Depending on your needs, our ongoing compliance delivery can include bookkeeping, tax calculations, GST filings and year-end accounts. You provide the source data; we help keep compliance work organised and moving.

Contact us to discuss compliance support for your online business.

FAQs

When does content creation become a business for tax purposes in Australia?

The ATO’s draft ruling describes indicators such as commercial purpose, intention and prospect of profit, business-like organisation, size and scale, and repetition and regularity. There is no single decisive indicator; the circumstances should be considered as a whole.

Do I have to declare free products and gifts from brands?

Generally, yes, if you receive them because of your content or in exchange for promotion. The ATO says these benefits generally need to be declared at market value and recorded.

Does the ATO know what platforms pay me?

The ATO says it may identify undeclared income through data-matching with platforms, lifestyle assets programs and community tip-offs. The media release warns that this can lead to an audit.

Do Australian content creators need to register for GST?

Some may. The ATO says creators may need to register if they meet certain criteria. Check the current ATO requirements for your circumstances and register when you meet the applicable criteria.

Australia Tax Update: ATO Refreshes SMSF Borrowing Rules for Business Real Property

by Ariful | Oct 21, 2026 | Australia Updates

The August law change now has updated ATO guidance

The Treasury Laws Amendment (Tax Reform No 1) Act 2026 changed section 67A of the Superannuation Industry (Supervision) Act 1993. For relevant arrangements entered into from 10 August 2026, an SMSF can use an LRBA to acquire real property only if the property qualifies as business real property under the SIS Act. Typical residential investment property is excluded.

The law took effect in August. The ATO guidance release, reported on 20 October, explains how the ATO now reads the amended rules in practice. The release was flagged by ATO SMSF branch director Kellie Grant at the SMSF Trustee Empowerment Day 2026 in Sydney.

You can read the ATO’s overview of LRBA property changes and the report on the six updated documents.

Know which guidance is open for comment

Two of the six documents are draft amendments open for consultation until 27 November 2026:

• SMSFR 2009/1: explains the meaning of business real property for SIS Act purposes.
• SMSFR 2012/1: covers key concepts in applying LRBA rules.

The draft changes reflect the new restriction. In SMSFR 2012/1, references to a “house” are replaced with “building”, and examples involving residential houses are changed to commercial or office buildings. The ATO is also making clear that the type of property used in an example must still meet the statutory BRP definition.

The ATO updated four further documents without consultation:

• SMSFR 2009/2: covers the meaning of “borrow money” under section 67 and clarifies that property acquired under the LRBA exception must be BRP.
• PCG 2016/5: addresses arm’s-length terms for SMSF LRBAs and reflects the exclusion of residential property under the new rules.
• TD 2016/16: considers non-arm’s-length income where an LRBA does not operate on arm’s-length terms, with references updated to BRP.
• PS LA 2023/1: concerns rectification directions for SIS Act contraventions, with LRBA examples updated to reflect the property restriction.

The ATO’s advice under development page provides information on draft SMSF guidance and consultation. The ATO has also identified QC107811 as an additional LRBA resource.

Check whether an existing residential LRBA is protected

The change does not automatically remove transitional protection from every SMSF that has a residential-property LRBA. The rules include protection for certain arrangements and transactions connected with the 10 August start date.

Check whether your records show that:

• The LRBA was entered into before 10 August 2026.
• The borrowing is a refinancing of an arrangement entered into before that date.
• A binding contract to acquire the property was exchanged before 10 August, even if settlement took place later.

Keep the executed loan and refinancing documents, contract exchange evidence, settlement records and trustee minutes together. This will help establish the relevant dates and transaction history if the arrangement is reviewed.

Do not assume that a property is protected simply because negotiations or preliminary paperwork began before 10 August. The relevant contract or borrowing documents need to establish that the transaction meets the transitional conditions.

Confirm that new borrowing relates to genuine BRP

A property’s label is not enough to show that it qualifies as business real property. A commercial building or office may be a candidate, but the SMSF must still satisfy the SIS Act definition and other relevant requirements.

Review the property’s actual use and supporting records. These may include lease agreements, business activity evidence, occupancy details and documents showing how the property is used. This matters because a change in use can affect whether the property continues to meet the relevant requirements during the arrangement.

For businesses that operate from SMSF-owned premises, such as offices, warehouses or retail sites, the new restriction does not necessarily prevent an LRBA. The property must genuinely qualify as BRP. By contrast, a strategy based on acquiring typical residential investment property through a new LRBA is no longer available under the amended rules.

Keep lender documents and compliance records aligned

The ATO’s updates also put renewed attention on LRBA terms. Review lender documentation against the arm’s-length guidance in PCG 2016/5. Check that loan terms, payments and supporting records are consistent with the arrangement being reported.

A practical file review can help make the position clear:

1. Confirm the dates. Record when the LRBA was entered into, when the contract was exchanged and when any refinancing occurred. This helps identify whether a transitional rule may apply.
2. Test the property classification. Document how the property meets the business real property definition. Do not rely only on a commercial listing or property description.
3. Check the property’s use. Keep evidence of business use and monitor any change during the LRBA, as the property’s status can be affected by its use.
4. Review the borrowing terms. Compare lender documents and actual payment records with the ATO’s arm’s-length guidance.
5. Track the draft consultation. If the draft amendments affect your operations, review the ATO consultation material and submit comments before 27 November 2026.

Completing these checks helps keep trustee records, lender documents and reporting consistent. It also gives the SMSF a clear record of why a transaction was treated as protected or why the property was considered BRP.

Treat the ATO release as an operational checkpoint

The October guidance does not create the August restriction; it clarifies how the ATO is updating its interpretation documents following the legislative change. Trustees, lenders and businesses should therefore check both the law’s effective date and the details of the relevant transaction.

For broader context on the previous day’s Australian tax update, read our coverage of the ATO’s extension to GIC remission for family trust tax liabilities.

Sterlinx Global operates as a Global Tax Compliance Suite, supporting ongoing bookkeeping, tax calculations, filings and year-end compliance for Australian and intern