Division 296: Why SMSF strategies need to change now

By Grant Abbott,

Lightyear Training Group & Lightyear Docs

Division 296 is quickly becoming one of the most important – and misunderstood – issues facing SMSF clients.

The way the rules are structured around realised gains is likely to change behaviour in a very predictable way.Many trustees will simply avoid realising gains to reduce the risk of breaching the relevant thresholds.

Two-Fund Strategy for Division 296? Here’s Why It Matters

The unintended consequence?

Instead of dealing with tax outcomes in a controlled and strategic way during a client’s lifetime, those issues are likely to be pushed into estate planning and death benefit outcomes.

From a structuring and compliance perspective, that creates complexity for families, advisers and executors.

In practice, this means traditional “single fund” thinking will not always be optimal going forward.

For some clients, a more deliberate separation of assets and strategies – including a two-fund approach – can provide greater flexibility, better control of tax outcomes and clearer estate planning pathways.

Video: https://youtube.com/shorts/njq0Ap8zvas?feature=share

Division 296 is not simply a technical change.It is a structural shift that requires advisers to rethink how superannuation strategies are designed, documented and implemented.

I’ll be discussing practical Division 296 strategies and case scenarios at the Tax Guru booth during the SMSF Association Conference in Adelaide, from 18 to 20 February.

If Division 296 is on your radar – now is the time to start re-engineering your SMSF strategy framework.