End of CGT means members foot the bill

Superannuation funds looking to merge have been urged to push the issue of continuing capital gains tax (CGT) relief for merged funds with the Government, in light of the actual cost to members.

The Association of Superannuation Funds of Australia (ASFA) chief executive, Pauline Vamos (pictured), said that the average fund carries a loss of 2.6 per cent into a merger, which would be passed on to members should the CGT relief be discontinued.

“Which is a lot, particularly off smaller balances,” Vamos said.

“For any funds merging or thinking of merging in the next six to 12 months please talk to me, or send a letter straight down to Treasury and the minister, explaining how and how much will be shaved off a members’ account if you merge carrying losses,” she added.

Vamos said the Treasury had put an amount of $10 million on the CGT relief, but that ASFA would be going to Canberra again to advocate that it was not a revenue item and should not be considered as such.

The issue of extending the CGT relief was one recommendation that was left out of the Stronger Super reforms, which Vamos said is causing her concern.

“We must not ignore the recommendations that have not been supported by the Government – because they will make the package whole,” she said.

Vamos added that over the coming year, ASFA would be advocating for the inclusion of “important but forgotten” recommendations.