Govt must act on CGT relief issue
Amid submissions to the Productivity Commission suggesting the Government's failure to act to provide capital gains tax (CGT) relief for merging superannuation funds will stall consolidation in the sector, the Association of Superannuation Funds of Australia (ASFA) has called for urgent action on the issue.
ASFA chief executive Pauline Vamos said the lack of clarity and direction from the Government on the CGT issue was impacting on the industry's ability to transition efficiently to the new MySuper regime.
"ASFA has consistently argued that CGT merger relief should be ongoing," she said.
Vamos said where the Government introduced significant regulatory change that had impacts on the structure of the superannuation industry, then it was appropriate that CGT merger relief be provided to enable super funds to make a properly considered decision whether to continue to operate on a standalone basis.
She said ASFA believed the Government's new Stronger Super regime would prompt many funds to consider mergers, and a key consideration would be the tax implications.
"A key consideration for superannuation funds in making a decision to remain a standalone entity is the financial impact on members of the loss of the value of the deferred tax assets of the fund should the fund decide that a merger is the appropriate course of action," Vamos said.
The ASFA chief executive said confidential discussions had suggested super funds were currently carrying deferred tax assets equivalent to between one and three per cent of member account balances.
She pointed out that a superannuation fund trustee's interpretation of their fiduciary duties meant the trustee was unlikely to complete a merger where it would result in a significant loss to members.
AUTHOR
Staff Writer
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