The Australian Institute of Superannuation Trustees (AIST) has supported the Federal Government’s budget proposition to clear up rules on capital gains tax (CGT) for trading stock.
CGT is the primary way of taxing gains or losses on assets of superannuation funds, but an exception to this rule has allowed the disposal of trading stock to be recognised on revenue account.
This means superannuation funds can deduct losses on assets held as trading stock against non-CGT income of the superannuation fund, rather than being quarantined to offsetting only capital gains.
These new regulations supported by the AIST aim to clear up any uncertainties in this area by removing the trading stock exception for primary shares, units in a trust, and land.
It will still apply for other assets if they are appropriately treated as trading stock.
The AIST said this removal will allow the treatment of these assets to be aligned to other rules, such as those for managed investment trusts, while still allowing complying superannuation funds to access the exception if needed.
Transitional rules apply meaning that complying superannuation funds will continue to treat covered assets as trading stock if they held and accounted for them just before the time of announcement in May.
