The ATO expectations of segregation of assets in SMSF is outlined here and here.
These measures effectively create two categories of SMSFs. Segregation is treated differently in each category:
1. Disregarded small fund assets
If your SMSF satisfies the definition of Disregarded Small Fund Assets (ITAA s295-387) you cannot use segregation to formulate the tax liability of your SMSF:
ITAA s295-385(7) Also, disregarded small fund assets are not segregated current pension assets.
This new definition targets superannuants with superannuation benefits in excess of $1,600,000, whether or not all those assets are in the SMSF and whether or not the superannuant is receiving an income stream from the SMSF.
The new definition means that the tax liability of the SMSF must be determined using the unsegregated method. Only. This appears to give rise to the problem that an SMSF in this category must get an actuarial tax certificate even if all assets in the fund are in pension phase for the whole year. In this case the tax certificate will say the fund is 100% tax exempt.
If your SMSF is fully in pension phase for the whole year and satisfies the definition of s295-387 Disregarded small fund assets check with your auditor or the ATO whether that certificate really must be obtained.
Regardless of the new definition you can still segregate your SMSF for SIS (legal ownership) purposes. For example, you can still have an investment property segregated to Mum and Dad in a fund that also has two of the children. But the whole fund must be treated as unsegregated for the purpose of calculating the tax liability.
2. All other SMSFs
If your SMSF does not satisfy the definition of Disregarded small fund assets there is no change to your ability to use segregation if you choose, but ...
... the ATO has decided that in some circumstances you must use segregation, even if you don't want to.
See this ATO article, in particular the section headed SMSF Assets are segregated for part of an income year.
The upshot of the ATO's requirement is this: if your SMSF is fully in pension phase for some parts of the year but not others you have to make separate determinations of the tax liability for each of those parts.
For example: your SMSF is fully in pension phase from 1-July to 31-July; you make contributions from 1-August through to 30-November that create an accumulation (non-pension) benefit; then you start a new pension 1-December with the accumulation benefit, so that the fund is again fully in pension phase.
In this case you cannot treat the fund as unsegregated for the whole year. This is because the ATO deems the fund to be segregated to current pension assets in the periods 1-July to 31-July and 1-December to 30-June. To claim ECPI for the period 1-August to 30-November you must get an actuarial certificate that covers that period only.
The periods, 1-July to 31-July and 1-December to 30-June, are automatically tax-exempt on investment income as provided by ITAA 295-385.
If you enjoy legal nitty-gritty you are invited to take a close look at ITAA 295-385. The tax-exemption of those part-year periods 1-July to 31-July and 1-December to 30-June appears to be given effect by the provisions of subsection 295-385(3), but not 295-385(4) which applies only to the whole year (see 295-385(5)). If this is correct then for the purpose of 295-385(3) the actuary must certify those separate periods using the statement supplied at 295-385(3)(b), otherwise they may not technically satisfy the requirement for tax-exemption.
Further reading
The ATO maintains a useful hub here of technical information for SMSFs.