Government extends CGT rollover relief
The Government has heeded calls from the industry to provide capital gains tax (CGT) rollover relief for merging superannuation funds, effective from 1 July 2012 to 1 July 2017.
The mandatory transfer of default members' balances to a MySuper product in another complying fund will also be eligible for the tax relief, as of 1 July 2013 to 1 July 2017.
A Financial Services Council (FSC) statement said the existing tax laws required losses during the global financial crisis to be crystallised when two funds chose to merge.
"Trustees could not - in accordance with their legislative duty to act in the best interest of members - go ahead with a merger under those circumstances," said the FSC.
Association of Superannuation Funds of Australia (ASFA) chief executive Pauline Vamos also welcomed the change, which comes after intense lobbying by ASFA.
"Super funds are currently carrying deferred tax assets equivalent to between 1 and 3 per cent of member account balances," Vamos said.
"Without the CGT rollover relief, the fund member would bear the brunt of the outcome, as efficiency gains from a merger would not be realised," she said.
MLC and NAB Wealth Group executive Steve Tucker also welcomed the announcement.
"The extension of this relief for merging superannuation funds will result in a better outcome for members' retirement benefits," Tucker said.
Self-managed superannuation funds will be excluded from the tax loss relief "because the MySuper requirements do not apply to them", according to the Government.
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