Australia’s superannuation landscape is being proposed to shift — and for commercial property owners, especially those with assets held via a Self-Managed Super Fund (SMSF), these proposed reforms could influence future tax outcomes, selling strategies and long-term planning.
The key is understanding what’s changing and preparing early.
What’s Changing?
The government’s proposal under Division 296 – Better Targeted Superannuation Concessions introduces additional tax on earnings for high-value superannuation balances.
Key elements:
- Higher tax rate on large balances:
- $3M–$10M portion: extra 15% tax (total 30%)
- Over $10M portion: extra 25% tax (total 40%)
- Start date: Applies from 1 July 2026.
- Indexation:
- $3M threshold indexed in $150k increments
- $10M threshold indexed in $500k increments
- Only realised gains taxed:
Earlier drafts included unrealised gains — this has now been removed. The tax now applies only to actual earnings, including rent, interest and capital gains when a property is sold. - Flexibility to pay:
Individuals can choose to pay the additional tax from inside or outside super. - Losses can carry forward:
Negative earnings on balances above the threshold can offset future Division 296 tax.
Why This Matters for Commercial Property Owners
Commercial property inside an SMSF can offer stable rental income, long leases and capital growth — but under these new rules, those benefits may be taxed differently.
Opportunity
✔ Greater certainty:
Removing the unrealised gains rule provides more predictable planning for illiquid assets like property.
✔ Structuring window:
With changes still ahead, there’s time to review whether property should remain inside super or be transitioned to another structure.
✔ Timing advantage:
Selling or restructuring before 1 July 2026 may reduce future tax exposure — depending on individual circumstances.
Risk
⚠ Higher tax on high balances:
Funds exceeding $3M may see reduced after-tax returns.
⚠ Liquidity pressure:
Tax liabilities must be paid — even if the asset isn’t being sold. SMSFs holding a single large property may need a liquidity strategy.
⚠ Buyer behaviour shift:
Investors may assess SMSF-held commercial property more cautiously or adjust pricing expectations.
What Should Owners Do Now?
Here are actionable steps to take ahead of the reforms:
- Review your SMSF balance and tax position with your accountant
Identify whether your total balance is likely to exceed the thresholds — now or in the future. - Assess your commercial property
Ensure valuations/appraisals, lease documentation, tenancy strength and cash flow are up to date. - Plan for liquidity
Consider how future tax obligations will be funded without creating financial strain. - Consider timing
If you’re planning a sale, restructure or contribution strategy, aligning this with the July 2026 timeline may be beneficial. - Engage advisors early
Combining advice from a tax specialist, SMSF advisor and commercial property expert will provide the clearest pathway.
How Lacey West Commercial Can Help
As specialists in commercial property sales and advisory, we assist SMSF and high-net-worth owners to:
- Understand how market sentiment is shifting under the reform
- Strategically time property transactions ahead of 2026
- Prepare valuations and leasing documentation to strengthen buyer confidence
Final Takeaway
These superannuation reforms represent the biggest structural change since SMSFs became mainstream. While they introduce complexity, timing and preparation can turn uncertainty into opportunity.
If you’d like to discuss how these changes may affect the value, sale timing or strategy for your commercial property, our team is here to help.
Book a confidential discussion with Lacey West Commercial today.
Source: https://www.pitcher.com.au/insights/division-296-tax-major-changes-announced/?utm_source=chatgpt.com