In a SuperGuardian webinar, Miller said that one of the key points people need to be mindful of is if they are going to reset their cost base for Division 296 purposes, they don’t have to make an election until the lodgement date at the latest for the 2026-27 year.
“They can clearly make an election whenever they want to, but there is no form to make an election on at the moment. The tax office is scrambling like the rest of us to get up to date with a lot of these sorts of things, so there’s time to act on the decision to reset,” Miller said.
“However, it raises a question when it comes to the concept of capital losses.”
Josh Williams, SuperGuardian’s chief executive, said there are actions that need to occur after 30 June 2026 in regard to cost-base reset, and some that could occur prior to that in the next couple of weeks.
“But interestingly, with our approach to the CGT cost-based reset and documenting that and determining which clients that applies to, just for some clarity, it is our intention to have that form part of the 2026 financial year-end returns,” Williams said.
“Again, it depends on whether or not we’ve got the prescribed form from the ATO, and clarity around exactly how we report that, so we’re waiting on that. However, it is our plan to roll it out over the course of the next 12 months as we finalise those returns, noting, however, that the deadline is actually not for the lodgement date of this coming 2026 return, it’s actually the 2026-27 return that the following year.”
However, Williams said that there was less time in respect to what can be done between now and 30 June 2026 and in regard to the concept of realising losses.
“There are two opposite perspectives on this. One perspective says realise as many assets in a lost position before 30 June 2026 as possible because that will be a benefit. The other perspective says it doesn’t make a difference whether you realise those assets in a loss position or not,” he said.
“To provide some clarity around that, if you have an asset, if you have a portfolio that is in a net gain position at 30 June across the total portfolio, there is really no benefit to realising losses before 30 June unless you’re selling down assets, between now and then, you’re selling down assets in a gain position.
“That then means that by 30 June you’re in a net loss position, and therefore wouldn’t elect a cost-based reset where there may be benefit. To be clear, from a tax perspective, there’s no real downside to realising assets in a loss position now, because they’re either offset against other gains in the current year or carried forward.”
Williams said there was a potential upside, though, if the client portfolio is in a net loss position at the present when you add all of the gains and losses across the portfolio, but close to being in a net gain position if you were to realise those losses between now and 30 June and move the portfolio into a net gain position.
“As a result, there is value in electing the CGT reset. That’s where it can be beneficial,” he said.
“For most clients it will be pretty straightforward when we get to the point of saying it’s a yes or no, it’s a pretty unique scenario where realising losses before 30 June can actually be beneficial.”
The decision to realise capital losses in FY26 should be investment led. Does it make sense to sell the asset or, is there a conviction about a recovery? If that asset would be sold and isn’t absorbed by the sale of capital gain positions, the CFCL will ease future capital gains, including Div 296.
Wash sales should not be contemplated so the sale of a loss asset now should see the capital deployed elsewhere.
As to the reset election, why would you make that decision before it is due? Almost 24 months up our sleeves and that is a long time in markets