Available-for-Sale Securities in Australia: 2026 Guide for Investors
Available-for-sale (AFS) securities have long played a role in Australian investment portfolios, offering flexibility for investors who want to balance liquidity and long-term growth. In 2026, changes to accounting standards and evolving market practices mean it’s important to understand how these assets are now classified and managed, especially for individual investors and self-managed super funds (SMSFs).
This guide explains what available-for-sale securities are, how they are treated under current Australian rules, and what practical steps investors should consider when including them in their portfolios.
What Are Available-for-Sale Securities?
Traditionally, available-for-sale securities referred to financial assets—such as shares, bonds, or hybrid instruments—that were not held for trading or held to maturity. Instead, they were kept available for sale, allowing investors to respond to market opportunities as they arose. Under previous accounting standards, unrealised gains and losses on these assets were recognised in 'other comprehensive income' and only affected profit and loss when the asset was sold.
Changes in Classification: FVOCI in 2026
From 2026, Australian entities follow updated accounting standards that align with international rules. The available-for-sale category has been replaced by the 'fair value through other comprehensive income' (FVOCI) classification for certain debt instruments. The main points are:
- **Equity investments** are generally measured at fair value through profit or loss, unless an irrevocable election for FVOCI is made at the time of initial recognition. - **Debt securities** can be classified as FVOCI if the investment strategy involves both collecting contractual cash flows and selling the assets when appropriate.
This shift affects how gains and losses are reported, how tax is calculated, and how investors plan their strategies.
Reporting and Tax Implications for 2026
Fair Value Reporting
All marketable securities must be valued at their fair market value at each reporting date. For FVOCI assets, unrealised gains and losses are tracked in reserves within equity, rather than being immediately recognised in profit and loss. This means that changes in value are visible in financial statements but do not directly affect reported profits until the asset is sold.
Capital Gains Tax (CGT)
For individuals and SMSFs, capital gains or losses on these assets are only realised for tax purposes when the asset is sold. Regular revaluation means investors need to keep detailed records of the original cost and any fair value adjustments over time. This is important for accurate CGT calculations and for meeting compliance requirements.
Disclosure Requirements
Current guidance requires clear disclosure of FVOCI reserves, including the transfer of realised gains to retained earnings when assets are sold. Investors and fund managers should also reconcile movements in these reserves for each reporting period, ensuring transparency and compliance with regulatory expectations.
How Investors Use FVOCI Assets in Their Portfolios
The flexibility of FVOCI assets allows investors to adjust their portfolios in response to market conditions without triggering immediate tax events. Here are some common strategies:
Diversification
Holding a mix of equities, bonds, and hybrid securities as FVOCI assets can help investors respond to market changes. This approach allows for adjustments to asset allocation without the need to realise gains or losses immediately.
Income and Tax Planning
Investors often use FVOCI assets to time the sale of investments for tax efficiency, particularly around the end of the financial year. By choosing when to sell, investors can manage the timing of capital gains or losses to suit their broader tax planning needs.
Risk Management
Because FVOCI assets are not locked in for the long term, investors can reduce exposure to underperforming assets before losses are realised in the profit and loss statement. This flexibility can help manage risk in volatile markets.
For example, an SMSF might hold a portfolio of Australian bonds classified as FVOCI. If market conditions change—such as a rise in interest rates—the fund can sell some bonds and reinvest in higher-yielding assets. Any unrealised gains or losses are reflected in equity until the sale, at which point they become relevant for CGT.
Practical Considerations for 2026
Record-Keeping and Compliance
With the move to FVOCI classification, accurate record-keeping is more important than ever. Investors and SMSF trustees should ensure they have systems in place to track fair value adjustments, cost bases, and realised gains or losses. Many digital portfolio platforms now offer tools to help with this process, making it easier to stay compliant with reporting requirements.
Regulatory Focus
Regulators such as ASIC and the ATO continue to focus on transparency and consistency in financial reporting. Investors should be aware of the need to reconcile FVOCI reserves and to provide clear disclosures in financial statements. This is particularly important for SMSFs and other entities subject to audit.
Evolving Investment Trends
As the distinction between trading and long-term investment becomes less clear, the flexibility offered by FVOCI assets is likely to remain valuable. Investors are increasingly considering environmental, social, and governance (ESG) factors when selecting assets, and FVOCI classification can support the inclusion of a broader range of investments in a portfolio.
Looking Ahead
The shift from available-for-sale to FVOCI classification reflects broader changes in how financial assets are managed and reported in Australia. For investors, understanding these changes is essential for effective portfolio management, tax planning, and compliance in 2026 and beyond.
By staying informed and maintaining good records, Australian investors and SMSF trustees can continue to use FVOCI assets to achieve a balance between flexibility, growth, and risk management in their portfolios.