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| Fiona Reynolds |
The Australian Institute of Superannuation Trustees (AIST) has reiterated its call for the Government to extend temporary loss relief for merging superannuation funds until 30 June 2013, citing recent global market volatility.
In a submission to the exposure draft on the issue, AIST chief executive Fiona Reynolds applauded the Government’s proposal to extend capital gains tax (CGT) loss relief for merging superannuation funds for three months from 30 June 2011 to 30 September 2011. However, in the face of “events on global financial markets over the last few weeks,” she argued that the relief should be extended “as far as possible”.
“The MySuper initiative is fundamental to the Australian superannuation environment moving forward. For a lot of funds it will be the central reason why funds may be considering mergers,” Reynolds wrote.
She added that while the Government’s position to recommendation 10.11 of the Stronger Super consultation (“CGT rollover relief … should be permanently available to the [superannuation] industry”) was ‘do not support’, the Government had acknowledged in its response that it “did support, in principle, appropriate relief for superannuation funds which are required by APRA to merge in order to meet MySuper licence conditions”.
The AIST believes that the loss relief should be extended until 30 June 2013 because that is the day before MySuper can be offered to new superannuation fund members for the first time, according to Reynolds.
Reynolds also pointed out that if some members were deprived of the tax benefits arising out of capital losses there would be a perception of unfairness – particularly given that the decision to merge often seems arbitrary.
“We have previously noted that the cost to members of mergers proceeding without CGT relief may be in the magnitude of tens of millions of dollars,” Reynolds wrote.
“In the investor climate of the past few weeks, we are obliged to stand by this observation, pointing to current market volatility as further evidence of this cost.”
