Temporary CGT relief not enough for super funds
The Government has announced a three-month extension of the capital gains tax (CGT) rollover relief for merging superannuation funds, but at the same time ruled out the possibility of permanent relief.
The new deadline will be 30 September, 2011, which is intended to give those funds currently in the process of merging time to complete mergers and still qualify for the temporary loss relief.
While the decision has been welcomed by industry associations, many are warning that it does not go far enough, and it will be members who end up footing the bill.
The Australian Institute of Superannuation Trustees (AIST) chief executive Fiona Reynolds said that three months did not give merging funds enough time to properly plan and complete mergers, especially when they were awaiting details of the coming Stronger Super reforms.
Reynolds said she would be recommending to the government a more appropriate date of 1 July 2013, the date at which the default MySuper funds can be offered for the first time.
“MySuper is a key reason why some funds are considering a merger, so it makes sense that CGT relief be extended long enough for funds to have enough time to absorb the details of the MySuper and other Stronger Super arrangements as they are released,” she said.
The Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos said that while she was pleased the government chose to listen to the industry, she believed a permanent CGT rollover relief would be of greater benefit to members.
“Fund members would take a direct hit on their accounts if fund mergers proceed without the extension of this relief for funds carrying capital losses,” she said.
Vamos stated the cost to members could be as high as two per cent of a member’s account balance.
In the announcement, the government stated that while it did not support permanent relief, it did support in principle the appropriate relief for funds required by the regulator to merge to meet the scale requirements of MySuper.
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