According to the Australian Taxation Office (ATO), crypto assets held inside self-managed super funds (SMSFs) reached A$1.7 million in assets in 2024-25, However, from 1 July 2026, Division 296 tax adds a further 15% tax on earnings above A$3 million. As a result, a rising crypto holding can push a member over that line.
This guide is for SMSF trustees and members who hold crypto assets. It explains how Division 296 tax treats crypto and how the tax is calculated. It also covers when the tax falls due and what to consider before 1 July 2026. However, the sole purpose test and related-party rules sit outside this guide.
Key Takeaways
- Division 296 tax adds 15% on super earnings above A$3 million, starting 1 July 2026.
- A crypto price rise can push a member’s balance over the threshold without any sale occurring.
- Only realised crypto gains count as Division 296 earnings, not paper gains sitting unsold.
- SMSFs can elect once to reset crypto cost bases to 30 June 2026 market value.
What Is Division 296 Tax?
Division 296 tax is a personal tax on high superannuation balances. It applies to earnings linked to a member’s total super balance (TSB) above the thresholds. The ATO assesses it against the individual. This holds even where the balance sits inside an SMSF.
The Two Balance Thresholds
The large super balance threshold (LSBT) is A$3 million for the 2026-27 income year. Earnings tied to the balance above this threshold attract an extra 15%. In addition, a second threshold, the very large super balance threshold (VLSBT), is A$10 million. Earnings above this threshold attract a further 10%, bringing the total additional tax to 25%.
Both thresholds are indexed, so they can rise over time. For 2026-27, the ATO looks only at a member’s TSB on 30 June 2027. From 2027-28 onwards, however, it uses whichever is higher between the opening and closing TSB for that year.
Who Division 296 Tax Applies To?
Division 296 tax applies to any individual whose TSB exceeds the LSBT, regardless of fund type. A member with interests across several funds has all those interests added together for this test. The fund types covered include:
- Self-managed super funds (SMSFs)
- Industry funds
- Retail funds
Limited recourse borrowing arrangement (LRBA) amounts are always excluded from TSB for this purpose. Division 296 disregards LRBA amounts when calculating TSB, ensuring the tax is based on the net value of the member’s superannuation interests. A member close to A$3 million should track their balance across every fund they belong to. Their SMSF balance alone is not the full picture.
How Does Division 296 Tax Treat Crypto Held In An SMSF?
Division 296 tax treats crypto the same as any other SMSF asset. What differs is how crypto moves. Sharp price swings can shift a member’s TSB quickly. A large realised gain from selling crypto can also create a substantial tax bill. Three points matter most for crypto holders.
Crypto Price Rises Can Push You Over The Threshold
The TSB test looks at market value, which includes unrealised movements in crypto prices. A fund holding crypto that rallies can push a member’s TSB above A$3 million by 30 June. This can happen without a single sale. That member then becomes an in-scope member for the year.
Becoming in-scope obliges the SMSF to work out and report that member’s relevant super earnings. This applies even if the fund made no crypto disposals. A member near the threshold should watch crypto valuations closely each June. A short-term price spike can trigger obligations a calmer market would not.
Only Realised Crypto Gains Count As Earnings
Although the TSB test uses market value, the earnings actually taxed are different. Instead, Division 296 fund earnings are based on the fund’s adjusted taxable income for the year, meaning only realised gains feed into that calculation. For crypto, this means assets that are actually sold count, alongside income such as staking rewards.
By contrast, an unsold crypto holding that doubled in value adds nothing to Division 296 fund earnings that year. This remains the case even if it pushes the member over the threshold. The tax applies only when the fund locks in the gain by selling. As a result, trustees have some control over the timing.
The One-Off Cost Base Reset For Crypto Held At 30 June 2026
An SMSF can elect to reset the cost base of every crypto asset to its June value. Similarly, every other CGT asset gets the same treatment. This recognises the value built up before Division 296 began and, as a result, stops that value from later inflating a reported gain.
Importantly, the election applies fund-wide rather than asset by asset, and it cannot be revoked. It must also be made by the SMSF annual return’s due date for 2026-27. However, it only affects Division 296 figures, while normal capital gains tax (CGT) rules still separately apply to any disposal.
How Is Division 296 Tax Calculated?
The calculation runs through a fixed sequence the ATO sets. Each step narrows a broad TSB figure down to a dollar amount payable. The four steps below apply to any member whose SMSF holds crypto among its other assets.
Step 1: Confirm The TSB Reference Amount
The TSB reference amount is the member’s total super balance (TSB) at the relevant date. For 2026-27, that date is 30 June 2027. From 2027-28 onwards, it is whichever of the opening or closing TSB for the year is higher. Limited recourse borrowing arrangement (LRBA) amounts are always excluded. This figure decides whether Division 296 tax applies at all for the year.
Step 2: Calculate The Proportion Above Each Threshold
This step works out what share of the member’s balance sits above each threshold. The large super balance threshold (LSBT) is A$3,000,000. The very large super balance threshold (VLSBT) is A$10,000,000. Each formula below expresses that share as a percentage.
Proportion over LSBT = (TSB reference amount − A$3,000,000) ÷ TSB reference amount × 100
or
Proportion over VLSBT = (TSB reference amount − A$10,000,000) ÷ TSB reference amount × 100
A member below A$3,000,000 has no proportion over the LSBT, so this step ends there for them. A member below A$10,000,000 similarly has no proportion over the VLSBT.
Step 3: Apply The Proportion To Total Super Earnings
Total super earnings is the sum of the relevant super earnings every fund reports for that member. Each fund works out its own Division 296 fund earnings and attributes a share to the member. Multiplying total super earnings by each proportion from Step 2 gives the taxable super earnings for that threshold.
Taxable super earnings (LSBT portion) = Total super earnings × Proportion over LSBT
or
Taxable super earnings (VLSBT portion) = Total super earnings × Proportion over VLSBT
These two results represent the earnings actually subject to Division 296 tax, rather than the member’s full balance or full earnings for the year.
Step 4: Apply The Tax Rates
The LSBT portion attracts a 15% tax rate. The VLSBT portion attracts a further 10% on top of that, since it already sits within the LSBT portion. Applying each rate to its matching figure from Step 3 gives the tax owed on that portion.
Division 296 tax (LSBT portion) = Taxable super earnings (LSBT portion) × 15%
or
Division 296 tax (VLSBT portion) = Taxable super earnings (VLSBT portion) × 10%
How And When Is Division 296 Tax Paid?
Division 296 tax is a separate personal liability from the fund’s own tax. It follows its own due date and its own payment options. Trustees supporting a member need to understand both. The fund can be asked to help fund the payment.
The 84-Day Due Date
Division 296 tax is due 84 days from the date of the notice of assessment. If an amendment raises the amount owed, a fresh 84 days applies to the extra amount. The original due date itself does not change. General interest charge applies to any amount unpaid by its due date.
Paying From Your Own Money Or Releasing It From Super
The member can pay Division 296 tax from personal funds. They can also elect to release money from super to cover it. The election must be made within 60 days of the notice, through myGov or a tax agent. It cannot be withdrawn once submitted.
Electing to release funds does not extend the 84-day due date itself. The 60 days is only for deciding whether to use super money at all. Division 296 tax is not deductible. Paying it does not reduce any other tax owed.
What To Do If The Assessment Looks Wrong
If a member believes an assessment is wrong, they should first confirm the figures the SMSF reported. An error often starts with the fund’s own reporting, not the ATO’s calculation. The SMSF may need to amend that reporting first.
If the member still disagrees once the fund’s figures are confirmed, they can lodge an objection. Objections apply where the calculation is wrong. They also apply where a member was wrongly treated as in-scope.
What Should SMSF Trustees With Crypto Consider Before 1 July 2026?
Trustees holding crypto face two practical questions before the tax starts. One is whether the fund can find cash if a large gain is realised. The other is whether the reset election suits the fund’s specific holdings.
Planning For Liquidity When Crypto Gains Are Realised
A large crypto disposal can create a sizeable Division 296 liability, due in cash soon after assessment. Crypto cannot always be sold quickly at a fair price, particularly in volatile markets. Trustees should not assume a fund can raise cash on short notice from crypto alone.
Holding some liquid assets alongside crypto gives a fund room to meet a Division 296 bill. This avoids a forced sale at a poor price. Trustees planning a large crypto disposal should model the resulting liability before the transaction, not after.
Making The Cost Base Reset Election On Time
The election is worth reviewing wherever an SMSF holds crypto with substantial pre-2026 gains. Without it, a future sale sweeps the entire historical gain into Division 296 earnings. That can create a large one-off tax spike.
Trustees should weigh this against any assets carrying unrealised losses, since those lose some value under a reset cost base. Records of the election, and each adjusted cost base, must survive for 5 years after the final CGT event.
How Can KoinX Help SMSF Trustees With Crypto Under Division 296?
Division 296 earnings depend on getting each crypto figure right. A wrong figure is hard to unwind once reported to the ATO. KoinX brings a fund’s crypto transactions together and calculates gains under Australian rules. That gives trustees a clear, checkable position before anything is reported.
Accurate Preview
Accurate Preview gives an error-free view of capital gains across every transaction, with easy movement between them. Trustees can check a crypto disposal’s realised gain before it enters the fund’s reported earnings. Catching an error here is still simple to fix.
Auto-Classification Of Transactions
Auto-Classification of Transactions sorts trade history into categories such as airdrops automatically. That separation makes it easier to isolate crypto capital gains. It separates them from staking rewards and other income the fund reports as taxable income.
Portfolio Insights
Portfolio Insights gives a clear picture of every transaction across the fund’s holdings. Trustees planning a crypto disposal can see the fund’s full position at a glance. That view supports the liquidity planning a Division 296 bill can demand.
Revamped Warnings Filter And Import Summary
The Revamped Warnings Filter and Import Summary flag potential issues and data overlaps as transactions are imported. Catching these early stops a data error flowing into a reported gain. That matters more once the figure feeds a personal tax assessment.
Do not wait until a large crypto sale forces a rushed reconciliation. Bring your SMSF’s crypto transactions into KoinX now. Review the fund’s realised gains before each year’s return is due. A clear position today avoids a scramble later.
Conclusion
The cost base reset election closes at the SMSF annual return’s due date for 2026-27, not later. Trustees holding crypto with large unrealised gains should decide well before that date. The election cannot be revoked once made. Waiting until a sale is imminent leaves little room to plan.
Sorting out a fund’s crypto position should not wait for a Division 296 notice to force it. KoinX calculates the fund’s crypto gains under Australian rules. Trustees can see a realised figure before it is reported. Start reviewing the fund’s holdings now, while the reset election remains open.
Frequently Asked Questions
Does Division 296 Apply If My SMSF Has No Crypto?
Yes. Division 296 tax applies based on a member’s total super balance across all their super interests. It does not depend on the type of asset held. A member with no crypto can still exceed the A$3 million threshold through shares, property or cash. They are assessed the same way.
Can I Withdraw Crypto From My SMSF To Avoid Division 296?
Withdrawing reduces a member’s TSB, which can affect whether the threshold is exceeded for a given year. However, a withdrawal must satisfy a genuine condition of release under superannuation law. It cannot be made purely to avoid tax. Selling crypto to fund a withdrawal still triggers ordinary capital gains tax.
Does Division 296 Replace Normal Capital Gains Tax On Crypto?
No. Division 296 tax sits on top of the fund’s tax, capital gains tax on a sale included. The fund still pays its normal 15% tax, or the concessional rate on eligible disposals. Division 296 tax is a separate, additional personal liability for the affected member.
What Happens If I Die With A Large Crypto-Holding SMSF?
If a member dies with a TSB above the LSBT, earnings for that year are still assessed. Earnings in later years, until the benefit is paid out, are added to that same assessment. Their estate or super interest generally funds the tax.
Is The $3 Million Threshold Indexed?
Yes. Both thresholds are indexed, so they will rise over future years in line with inflation. That indexation aims to stop members being drawn in purely through wage and asset growth over time. It targets genuine increases in real wealth instead.
