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CGT relief needs more work: ASFA
Capital Gains Tax (CGT) relief should be extended to include intrafund transfers as a result of the mandatory transfer of existing default balances into MySuper products the Association of Superannuation Funds of Australia (ASFA) said.
In a submission to Treasury, ASFA outlined a number of tax relief proposals for the compulsory transfer of default accounts to MySuper products, and also in the case of fund mergers, calling on the Government to propose a date for industry consultation.
ASFA said exposure draft for tax amendments for merging superannuation funds did not deal with the CGT issue which was flagged back in April.
ASFA said where the underlying investment of a default fund is held in a pooled superannuation trust (PST) and the MySuper option is not held through the same PST, it appeared no relief would be provided which would disadvantage the member.
Although the transfer could be delayed until 30 June 2017, ASFA said the lack of clarity was having adverse affects on the design of MySuper products.
ASFA said that while exposure draft dealt with the capital and revenue losses of compulsory transfer of members through fund mergers, tax could disadvantage members in merger situations in a number of ways.
These included losing the benefits of franking credits during the 45-day holding period rule, members who are unable to seek refunds of no-TFN contributions tax if they had not provided their TFN to the closing fund, and the impact of stamp duty on asset transfers.
ASFA also said the Government should consider relief for self-managed super funds that merge with an Australian Prudential Regulation Authority (APRA) regulated fund.
In a separate submission to treasury, ASFA also said the Government should provide greater clarity on the breakdown of the SuperStream levy.
It questioned why APRA regulated funds carried the entire burden of the levy while employers, self-managed super funds and the Commonwealth also benefited.
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