Division 296 Tax Applies from 1 July 2026: How the Updated Cleardocs SMSF Trust Deed Supports Compliance

Division 296[1] was passed into law on 10 March 2026 and applies from 1 July 2026 — meaning the first year it affects is the 2026–27 financial year. The Division 296 reforms introduce an additional layer of tax on superannuation earnings for individuals whose total super balance exceeds $3 million. Earnings attributable to the portion above $3 million are taxed at an additional 15% (lifting the effective rate to 30%), and a further 10% applies to the portion above $10 million (lifting the effective rate to 40%). While the tax is assessed to the individual, in practice it is the SMSF trustee who must implement the outcome.

Why the Trust Deed Matters

Most existing SMSF trust deeds were drafted well before these Division 296 rules. That does not mean they are non-compliant — but they may be silent on the specific steps a trustee now needs to take. A deed that expressly addresses these new Division 296 rules provides clarity and consistency, giving trustees a clear administrative roadmap rather than leaving them to piece together authority from general powers that were not designed with this regime in mind.

The recently updated Cleardocs SMSF trust deed (Updated Cleardocs Deed) includes purpose-built Division 296 provisions, providing trustees with express powers and clear boundaries at each stage of the compliance process.

How the Updated Cleardocs Deed assists compliance

• Debiting member accounts under release authorities: The ATO may issue a release authority directing the trustee to pay a member's Division 296 tax. The Updated Cleardocs Deed expressly authorises the trustee to debit the correct member's accumulation or pension account for amounts required under a release authority, or in relation to a debt account discharge liability, or any related charge — and to act on a member's nomination as to which interest should be debited.
• Calculating and attributing member-level earnings: Division 296 tax is calculated by reference to each member's earnings, not the fund's overall earnings. The Updated Cleardocs Deed gives the trustee authority to calculate, attribute and report Division 296 earnings on a fair and reasonable basis, including by obtaining and relying on an actuary's certificate where required.
• Managing debt account discharge: Where Division 296 tax is deferred to a debt account (for example, for defined benefit interests), it becomes payable when the member receives a relevant benefit. The Updated Cleardocs Deed authorises the trustee to calculate, pay and adjust for any discharge liability at that time.
• Making elections — including the CGT cost base reset: The Updated Cleardocs Deed empowers the trustee to make, document and implement any election available under Division 296, including the one-off election to reset CGT cost bases to 30 June 2026 market values.
• Reporting and information provision: The Updated Cleardocs Deed authorises the trustee to provide information to the ATO, members, or other relevant authorities as required, and includes a catch-all power to take any other action required under Division 296.
• Clarity around liability: The deed confirms that Division 296 tax is and remains the member's personal liability. The trustee acts solely as a statutory payer from the relevant member's own interest — not from another member's assets, the fund's reserves, or the trustee's own resources.

Practical benefits of updating SMSF Deed

An updated deed does not create new legal obligations — Division 296 does that by itself. What it provides is a framework that reduces trustee uncertainty, supports consistent decision-making, and facilitates smoother ATO interactions. For SMSF trustees and their advisers, the deed tells you what to do, confirms you can do it, and protects you while you do.

[1] Division 296 of the Income Tax Assessment Act 1997 (Cth) was introduced by the Treasury Laws Amendment (Building a Stronger and Fairer Super System) Bill 2026.