Merging funds will have an extra three months to complete their mergers and still receive the capital gains tax (CGT) loss relief, but industry associations say the extension does not go far enough.
In announcing the three-month extension, Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, ruled out the possibility of providing further extensions, or to make the relief permanent.
The new deadline will be 30 September, 2011, and is intended to give those funds currently in the process of merging time to complete mergers in an “orderly fashion”, the Minister said.
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.
