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Nadine Connell, co-founder of Smart Business Plans, told SMSF Adviser that most common by a wide margin is that clients believe their SMSF will be under the $3 million threshold and believe they are safe from any tax impact.

She added the other two misconceptions are that the cost-base election will take care of it and that SMSF borrowing was almost banned.

“The ‘I’m under $3 million so I don’t need to do anything’ response is the most common,” she said.

“But the TSB calculation routinely misses industry super from earlier employment, or doesn’t account for what a planned commercial property purchase does to their position at the first assessment date.

“In regard to the cost base election response, clients assume it’s automatic when it’s not. It’s a decision the trustees have to actively make. What they’re often missing is the valuation behind it which has to reflect conditions at 30 June 2026, and commercial valuations are already running four to six weeks in some areas.

“Finally, with the belief that SMSF borrowing was almost banned a meaningful number of clients paused plans through 2025 on that belief. The Treasurer ruled it out, but the decision hasn’t been revisited.”

Connell said confusion is becoming more apparent as the deadline for the start of the new legislation gets closer.

“However, the clients you should worry most about aren’t the confused ones. They’re the quiet ones. They’ve read a headline, done a back-of-envelope calculation, and filed the issue away,” she said.

“Those are the clients making decisions now, or deliberately not making them, based on an incomplete picture. From an adviser perspective, those are the clients least likely to call you between now and 30 June.”

She continued that for clients approaching $3 million, the backwards calculation method can be used whereby you start with the target property price, work out likely market rent, calculate loan repayments, identify the gap.

“That gap is what needs to be closed with voluntary contributions, planned against the caps and documented. If the gap is too big for the caps, the property target comes down or the structure gets rethought,” she said.

“The discipline matters for Div 296 reasons, too. The bigger the contributions needed to make a property work, the faster the fund’s balance grows, and the sooner the $3 million threshold becomes their problem.

Connell said for clients already above the thresholds of $3 million and $10 million, the strategies shift.

“I see spouse balance splitting and re-contribution come up in conversations with their accountant. From our side, the question is liquidity. Does the fund have the cash flow to meet whatever assessment comes, without having to sell a property to fund it. That has to be planned in, not figured out when the bill arrives,” she said.

Although the decision whether to use the cost-base reset election sits with the accountant and the trustees, Connell said the timing of doing that is of importance.

“Whatever they decide, they need a 30 June 2026 valuation, and commercial valuation lead times can be up to six weeks in some areas of our network. The mistake we see is clients waiting for the accountant to tell them what to do, when by then the valuer’s booked out,” she said.

“Get the valuation commissioned now, then let the accountant run the numbers when they’re ready. The valuation is the ingredient, so don’t run out of it while you’re deciding on the recipe.”

Despite the threat of a large Div 296 bill, property owners aren’t getting rid of real estate from their SMSF portfolios, Connell said.

“If anything, it’s the opposite. Clients are directing their next investment toward commercial property in an SMSF rather than residential outside super. I think this trend will accelerate if the CGT and negative gearing changes expected in the upcoming May federal budget come to fruition,” she said.

“The structure still stacks up for balances comfortably under $3 million, and for business owners buying their own premises the fundamentals haven’t changed.”

In the lead up to the start of Div 296 legislation coming into force, Connell said advisers should be doing three things.

“Explain what’s actually in the final law, because a lot of client framing is still stuck on the 2023 version,” she said.

“Then flag the 2026-27 liquidity question: clients with property-heavy SMSFs need cash flow inside the fund to meet a possible Div 296 assessment, on top of normal expenses. That’s planning, not improvising on the day.

“And finally, reach out to the clients least likely to call you. The ones who’ve gone quiet since March because, from their perspective, they’ve already worked it out. Those are the ones who haven’t.”

by Keeli Cambourne
April 27, 2026
smsfadviser.com