ING wants to be rid of legacy life issues
ING wants the Federal Government to provide capital gains tax (CGT) rollover loss relief for up to two years to facilitate a rationalisation of structures in the superannuation industry, including a move away from investment via life companies.
In a detailed submission to the Cooper Review, ING has argued that the use of life structures represents a legacy issue that has resulted in the addition of complexity and cost.
It said on this basis, the Government might be justified in extending the CGT rollover relief it provided with respect to fund mergers.
“We believe that broader rollover relief is necessary to allow trustees to restructure away from life company investing structures," the ING submission said. “The rollover relief should not rely on there being a successor fund transfer, or on the assets being in a net loss position to access the relief.”
Explaining its position, ING said that while it had originally made sense to leverage the existing life company infrastructure to manage superannuation investments, these advantages had been eroded over the years as superannuation funds had achieved scale in their own right.
“We are left with the legacy of investing via a life company, which involves significant complexity and duplication of effort affecting a significant book of business,” it said. “This legacy is largely no longer an efficient structure, but significant barriers exist to removing the life company.”
It said the restructure to move ownership of assets from the life company to the trustee of the superannuation fund would trigger CGT and consequently trustees often could not conclude that it would be in the best interest of members to change the investing structure.
AUTHOR
Mike Taylor
Recommended for you
A relevant provider has received a written direction from the Financial Services and Credit Panel after a superannuation rollover resulted in tax bill of over $200,000 for a client.
Estimates for the calendar year 2024 put the advice industry on track for a loss in adviser numbers as exits offset gains from new entrants.
Adviser Ratings shares five ways that financial advice changed in 2024 with an optimistic outlook for 2025, thanks to the Delivering Better Financial Outcomes legislation.
National advice firm Invest Blue has announced several acquisitions, including the purchase of an estate planning and wealth protection business Lambert Group.
