The SMSF sector is changing fast. Will your practice be audit-ready?

What the 2026 Class Benchmark Report means for SMSF professionals in the year ahead

The 2026 Class Annual Benchmark Report signals strong momentum across the SMSF sector – momentum that is reshaping how members engage with their super and the support they need from professional advisers.

Members are entering SMSFs younger, contributing more actively and using their funds to manage investments, retirement income and broader wealth strategies.

Add in a significant wave of regulatory change and tax-system upheaval, the importance of the four Ps – preparation, planning, process and proof – becomes clear. For accountants and advisers, this creates opportunities to have more valuable conversations with clients – but also a need to plan earlier for increasingly detailed compliance and audit requirements.

In this article, we share our key takeaways from Class Ignite 2026, together with insights into the areas ASF Audits will focus on during the 2026-27 audit season.

Division 296: look beyond the $3 million threshold

Division 296 is one of the most significant changes impacting SMSF professionals in the year ahead.

The one-off election to adjust the cost base of eligible CGT assets held at 30 June 2026 to their market value for Division 296 purposes must be made by the due date for the fund’s 2026–27 income tax return and cannot be revoked. This makes it a genuine strategic review point – not merely another item on the annual compliance checklist.

The Class data shows why this opportunity is not limited to members already above the $3 million threshold:

• 72.8% of Class SMSFs had a positive net unrealised CGT position at 30 June 2026.
• The average unrealised gain among those funds was approximately $620,000.
• 8.8% of Class SMSFs had at least one member balance above $3 million.
• A further 9.4% had a member balance between $2 million and $3 million.
• 95.4% of funds with a member balance above $3 million had a positive unrealised CGT position.

For the vast majority of SMSFs with a net positive unrealised gain, an election may be beneficial given any members’ total super balance could exceed the threshold in the future.

Division 296 may also create a new actuarial-certificate requirement to attribute fund earnings between member interests. Early identification of potentially affected funds will help prevent a year-end rush.

Market valuations: the real story

Market valuations are often treated as a compliance burden required to meet 30 June reporting requirements. Yet the Annual Class Benchmark Report clearly demonstrates their much broader significance. The headline insights – from fund and member balances to asset allocation, unrealised CGT positions and investment trends – all depend on assets being reported at values that are current and meaningful.

This same principle applies at an individual-fund level. As Aaron Dunn highlighted at the recent ASF Audits Technical Seminar, the market value adopted for an SMSF asset has the potential to impact more than just the fund balance sheet. It can influence:

• A member’s total superannuation balance
• Division 296 exposure and the CGT cost-base election
• Pension commencement and minimum pension calculations
• Contribution eligibility
• ECPI, actuarial calculations and segregation eligibility
• In-house asset ratios
• Related-party acquisitions, lease arrangements and other related-party dealings
• LRBA safe-harbour considerations
• Commutations, rollovers out, death benefit payments, in-specie transfers and wind-ups

The opportunity for advisers is to understand that the timing and quality of a market valuation can make or break a strategy, tax or compliance outcome. A valuation obtained only after the strategy is implemented, or after an audit has commenced, may trigger unintended consequences.

Residential property LRBA changes

The LRBA changes that came into effect on 10 August 2026 are significant for the SMSF sector. On the Class platform, residential property held under an LRBA represented 47.7% of all residential property holdings in FY25 and 92.7% of all SMSF LRBA holdings by number. Class identified 3,672 new residential property LRBA holdings during the year, including 1,166 in newly established SMSFs.

The regulator is also watching closely. At the SMSFA Audit Day 2026, Kellie Grant indicated that the ATO will closely monitor the 13,000 new SMSFs registered between the announcement of the changes and their commencement.

For SMSF professionals, this is an opportunity to conduct an early review of affected clients – not only those with a completed borrowing arrangement, but also funds established during the relevant period with proposed property acquisitions or borrowing arrangements still being implemented.

The combination of increased regulatory scrutiny and the practical risks that arise when complex transactions are implemented under time pressure means that auditors will pay close attention to:

• The purpose and timing of fund establishment;
• Fund establishment and administrative obligations;
• The date of any relevant contract;
• Whether the property qualifies as business real property;
• The terms of the proposed or existing borrowing;
• Related-party transactions;
• Asset ownership, title and bare-trust arrangements;
• Evidence supporting eligibility for transitional treatment.
  
  

Where to focus in 2026–27

The ATO’s focus on market values, trustee administration and borrowing arrangements is reflected in ASF Audits’ updated procedures for audits submitted from 1 July 2026.

Market-value evidence

Market values need to be supported annually, particularly for property and unlisted investments. A prior-year valuation should not simply be rolled forward as the only evidence for the current year.

For property, obtain current evidence that is appropriate to the asset and circumstances – such as an independent valuation, desktop valuation, Cotality report, comparable sales or other objective information. For unlisted trusts and companies, financial statements, trustee statements and spreadsheets may be useful context, but they will not always be enough on their own. The supporting records should explain how the value was determined and why it is reasonable.

Trustee records and fund administration

Small administrative gaps can become significant later. Ensure trustee declarations, fund establishment documents, lease agreements, trustee minutes and relevant ownership records are retained and accessible.

This is particularly important for newly established funds, changes in trustees or directors, funds with related-party arrangements, and clients implementing significant strategies for the first time.

Borrowing arrangements and offset accounts

For funds with LRBAs, review the full arrangement – not simply the year-end loan balance. This includes the loan agreement, bare-trust documents, title and security arrangements, related-party terms, bank activity and any offset-account conditions.

Non-ADI offset accounts deserve particular care. Depending on the account terms, withdrawals may be treated as redraws and a charge over fund money may create a separate compliance issue.

A smoother audit starts with keeping the right records as transactions and decisions happen, rather than having to revisit them months later when the fund is ready for audit.

Turning momentum into better audit outcomes

The Class Benchmark Report shows a sector with strong momentum and increasingly engaged members. The opportunity for accountants and advisers is to turn that momentum into proactive planning: identify relevant clients, start the right conversations early and prepare the evidence that supports informed decisions and compliant, on-time lodgement.

At ASF Audits, we believe the best audit outcomes begin well before a fund reaches audit. By helping you identify issues early, strengthen the evidence behind key decisions and keep pace with a changing regulatory environment, we support more confident client conversations, smoother lodgements and better long-term SMSF outcomes.