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Call for super CGT rollover concessions
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| Harvey Kalman
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The Government needs to pass legislation allowing retail funds to roll over their assets and CGT concessions when they merge, according to the head of funds management at Equity Trustees, Harvey Kalman.
“We’ve got a real problem in the non-super industry about legacy funds or small funds, in that [if] a retail fund that was first set up, and feeding into a wholesale fund, and the assets are exactly the same, only the fees are different.
“I need to be able to roll that fund into the wholesale fund, and keep the capital gains tax (CGT) parcels in place, so that the investor gets the benefit of being in an $80 million fund instead of a $2 million dollar fund,” Kalman said.
The government does not currently allow CGT concessions for merging non-super funds.
The need to allow non-super funds to merge is even greater since the financial crisis decimated the assets of several retail funds, Kalman said.
Fund managers are being forced to close funds and disadvantage investors because they can’t get back their losses, or keep open a small fund that’s costing money and creating other costs that are just being subsidised elsewhere, but with legislation, managers could roll a feeder fund into a larger fund and create more scale and less costs, Kalman said.
The industry has been talking to the government for decades on product rationalisation, but you can’t completely rationalise a product because there might be differences in the funds characteristics, and those are unfortunately driven by taxes, he said.
AUTHOR
Mike Taylor
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