Division 296's one-off cost base reset election is often discussed as a concern only for members already above $3 million. In fact the election is open to any eligible fund, and some of the trustees with most to gain from thinking about it are those whose members are approaching, but not yet at, that threshold. The question worth asking is not simply whether a member is over the line today, but which funds could benefit from reviewing the election before growth carries them there. This article sets out the characteristics that make a review worthwhile.

The election is not just for the wealthy

A common misconception is that the cost base reset election only matters once a member's total super balance exceeds $3 million. The election itself is available to eligible funds regardless of current balances, and because it is a one-off tied to the start of the regime, a fund that ignores it now cannot revisit it later if a member's balance grows into Division 296 territory.

That is why the $3 million figure is better read as a prompt to review than as an eligibility gate. A member comfortably under the threshold today may cross it within a few years through Investment growth and contributions, and the transitional election is only available around commencement. Reviewing it early keeps the option genuinely open.

None of this means every fund should elect. It means every fund that could plausibly be affected should at least understand the choice before the window shuts.

Funds with large unrealised gains

The clearest candidates for a careful review are funds holding Assets with significant unrealised gains that are likely to be realised while Division 296 applies. Because the election keeps pre-2026 growth out of the Division 296 calculation, funds sitting on big embedded gains, such as long-held property or a parcel of shares bought cheaply years ago, are where the election can do the most work.

For these funds, realising a large gain after commencement without the election could pull decades of pre-existing growth into the Division 296 Earnings figure for an affected member. The election is designed precisely to prevent that, so funds with this profile have the strongest reason to model it.

Members on a trajectory to $3 million

Balance trajectory matters as much as today's number. A member at, say, $2.5 million with a growth-oriented portfolio and ongoing contributions may realistically reach the indexed threshold within a handful of years. For that member, the election is a live consideration now, even though Division 296 does not yet touch them.

By contrast, a member whose balance is modest and unlikely to approach $3 million has little practical reason to elect, and given the all-in, irrevocable nature of the reset, may be better off leaving well enough alone. The point of the review is to sort funds into those for whom the election is relevant and those for whom it is not.

Weigh the downsides too

A review is not a presumption in favour of electing. The reset is all-in across the fund's directly held CGT assets, so assets in an unrealised loss position have their cost base reset too, and it is irrevocable once made. A fund whose assets are mostly around or below their current value could be worse off, or gain little, from resetting.

This is why the decision is a modelling exercise, not a reflex. The right answer depends on the fund's specific asset mix, the size and timing of expected realisations, and each member's position relative to the threshold. A review identifies whether electing helps, hurts or is immaterial for the particular fund.

The role of valuations

Any serious review has to grapple with valuations, because the reset uses Market Value at 30 June 2026. Funds with listed securities can value those easily, but funds with property or unlisted assets need defensible valuations as at that date. That takes time and, often, an independent valuer, which is another reason to start the review well before the lodgment deadline.

Good valuations are not just a compliance formality here; they are the inputs that determine whether the election is worthwhile and by how much. A review conducted without reliable 30 June 2026 values cannot really reach a sound conclusion.

Turning the review into a decision

For trustees, the practical path is to identify whether their fund fits the at-risk profile: material unrealised gains, members near or heading towards $3 million, and expected realisations during the Division 296 era. Funds that fit should model the election with a qualified adviser; funds that clearly do not can note the analysis and move on.

The decision itself, and the deadline, belong to a later conversation, but the review that identifies whether the election is even relevant is worth doing early. This article is general information only and is not tax advice; whether any fund should make the election depends on its own circumstances and should be worked through with an appropriately qualified adviser.

A sensible way to run the review is to treat it as part of the fund's broader Division 296 readiness rather than an isolated tax question. The same information a Trustee needs to judge the election, current asset values, embedded gains, each member's total super balance and its likely trajectory, is exactly what they need to understand their overall Division 296 exposure. Doing the analysis once, thoroughly, answers several questions at the same time and avoids paying twice for overlapping work.

Finally, trustees should resist two opposite temptations: assuming the election is irrelevant because no member is over $3 million today, and assuming it must be worth making because it sounds like a tax saving. Neither shortcut is reliable. The only sound basis for a decision is a fund-specific analysis that weighs the all-in, irrevocable reset against the fund's realistic future. A review clarifies which category a fund falls into, so that the eventual decision is made on evidence rather than on a hunch or a headline.

Practical takeaway

The Division 296 cost base reset election is open to eligible funds regardless of current balances, so the $3 million figure is a prompt to review, not a gate. The funds with most to gain from a review hold significant unrealised gains and have members near or on a trajectory towards the threshold. Because the reset is all-in and irrevocable, the review is a modelling exercise, not a default choice. Obtain 30 June 2026 valuations and model it with a qualified adviser well before the deadline.