ATO warned on treatment of Div 296 mistakes

Mike Taylor

Managing Editor and Publisher

15 May 2026

The Australian Taxation Office (ATO) should not seek to apply a proposed new ruling around Member Accounts reporting to the new Division 296 regime on superannuation balances over $3 million, according to the Association of Superannuation Funds of Australia.

The big super group has made clear to the ATO that applying the proposed new rules to Division 296 would be inappropriate because it would juxtapose event-based reporting with a principles-based framework.

In a submission responding to an ATO consultation paper covering proposed changes to the rules around Administration of penalties for failure to comply with superannuation member account obligations, ASFA makes clear there are clear differences of purpose.

“There is the potential for the draft ruling to be applied beyond the MAAS and MATS reporting for which it is designed, including to obligations under the new Division 296 tax on superannuation balances above $3 million,” ASFA said.

“The ruling is drafted around event-based reporting, where individual member-level events is reported to the ATO, with such reporting having standardised data and clear points of noncompliance.

“Division 296 can be differentiated by its principles-based framework, requiring the attribution of fund level realised earnings to members on a fair and reasonable allocation based on industry available processes such as unit pricing and valuation methodologies.

“This means the calculation of member Division 296 tax may vary, develop over time, and be subject to amendment. Applying the framework to Division 296 reporting obligations would create disproportionate outcomes, particularly where recalculations are required following amended tax returns or updates to methodologies.

“Accordingly, the ruling should not be extended to apply to other reporting frameworks, and particularly the new Division 296 tax,” the ASFA response said.

Elsewhere in its response, ASFA urges the ATO to adopt a facilitative approach, particularly when assessing multipole false or misleading statements by superannuation funds with a common source.

“The ATO should be amenable to classifying MATS / MAAS incidents based on systematic risk rather than on each individual member report, and in turn, assessing a fund for compliance penalties (if applicable) on this basis.

o For example, if a ‘time-out’ event arises where MAAS is not submitted within 5 business days due to an administration system issue, a fund should not be penalised for each MAAS report that is impacted.

o Instead, the issue as a whole should be considered by the ATO & funds should be afforded the opportunity to have penalties remitted where they are proactively engaging & disclosing to the ATO

o This approach and expectation have recently been raised with the ATO as part of the consultation on Payday Super draft LCRs.