With Division 296 now in force from 1 July 2026, it is easy for self-managed super fund conversations to become tax conversations. Yet one SMSF specialist warned this week that tax is only one part of the picture. Control, family arrangements, estate planning, insurance, asset protection, cost and time all shape whether a strategy still makes sense years from now.

A warning against tax-first thinking, Kate Timms, a partner in Superannuation and SMSF at RSM Australia, told the Class Ignite 2026 conference in Sydney that focusing purely on tax could lead to poor long-term outcomes.

She suggested tax considerations can push people towards decisions that may not suit them for 20 years down the track.

Her example came from an SMSF Association roadshow on Division 296. An adviser reportedly said all the Division 296 issues had been solved by moving balances above $3 million into discretionary trusts. A later federal budget announcement of a proposed 30 per cent minimum tax on discretionary trust distributions then undermined that approach. Timms described the outcome as a tax-driven response that created a bigger problem.

The trust measure is a proposal, not law. SMS Magazine reports that draft legislation is still being consulted on, with industry groups seeking changes. That uncertainty is part of the point: strategies built around one tax setting can be exposed when settings change.

Division 296, by contrast, is enacted law. It applies from 1 July 2026, with 2026–27 being the first income year affected.

According to the ATO, an additional 15 per cent tax applies to the proportion of Earnings attributable to a member's total super balance above $3 million. A further 10 per cent applies to the proportion above $10 million. Combined with the standard 15 per cent fund tax, that means effective rates of around 30 per cent and 40 per cent on the relevant share of earnings.

Importantly, the tax applies to realised earnings, such as rent, interest, dividends and net capital gains. It does not tax unrealised gains. The Liability is assessed to the individual and can generally be paid from super.

For most SMSF trustees, whose balances sit well below $3 million, Division 296 may have little or no direct effect.

Control and Investment choice

For many trustees, the original appeal of an SMSF is control over investment decisions. The ATO's March 2026 quarterly statistics show listed shares made up 26 per cent of total SMSF Assets and cash and term deposits 16 per cent, the two largest asset classes.

That control comes with legal obligations. Every investment must meet the sole purpose test, which requires the fund to be maintained to provide retirement benefits to members. Trustees must also prepare, regularly review and follow an investment strategy.

Control can be valuable, but it also means decisions, and their consequences, rest with the trustees rather than a professional fund manager.

Family pooling and shared decisions, an SMSF can have up to six members, and each member is generally a Trustee or a director of the corporate trustee.

Pooling family balances can give a fund greater scale, which may help spread fixed costs.

However, shared ownership brings shared responsibility. Trustees may disagree on investments, and life events such as separation, illness, death or moving overseas can complicate how a fund operates. When a member leaves or needs a benefit paid, the fund may need enough Liquidity to pay it without forcing a sale at the wrong time.

Estate planning, insurance and asset protection

Estate planning is another area where an SMSF may offer flexibility, depending on the trust deed. Death benefit nominations and the ongoing control of the fund after a member dies are issues many trustees consider carefully, often with legal advice.

Insurance is also part of the framework. The investment strategy rules require trustees to consider whether the fund should hold insurance cover for its members. members need to actively decide whether the fund should hold cover.

Timms also raised asset protection. For members with total super balances above $10 million, she suggested the discussion may shift from how super is taxed to whether an SMSF remains the most appropriate structure for protecting those assets.

Costs, time and responsibility

Non-tax considerations also include cost and workload. SMSFs can be expensive to set up and run, and in some cases can cost more than retail and industry funds. The lower a fund's balance, the greater the impact of fixed costs on returns.

Research indicates trustees spend on average more than eight hours a month managing their fund, or more than 100 hours a year.

There are protections trustees give up too. if an SMSF loses money through theft or fraud, members will not have access to the government compensation available to those in APRA-regulated funds, and SMSF members cannot take complaints to the Australian Financial Complaints Authority.

Why this matters now

Interest in SMSFs is growing strongly. The SMSF Association, citing ATO data, said more than 50,000 new SMSFs were established in 2025–26, a record, with 12,264 in the June 2026 quarter alone. Members aged 35 to 44 were the largest cohort of new members, at 39.1 per cent.

SMSF Association chief executive Peter Burgess linked the growth partly to the 12 per cent super guarantee helping balances build faster. Younger trustees may be running their funds for decades, which makes the long-term view Timms described particularly relevant.

The bottom line

Division 296 has made tax a live issue for some SMSF trustees, but a message from this week's Class Ignite conference is that tax should not be the only lens. Control, family arrangements, estate planning, insurance, asset protection, cost and time can matter just as much over a fund's life. Tax settings can also change, as the proposed trust measures show. Whether an SMSF, or any particular strategy within one, is appropriate depends on individual circumstances, and