Australia's peak superannuation body today welcomed the Government's draft legislation which will change tax laws retrospectively so that superannuation funds can merge without triggering an adverse tax event.
The Association of Superannuation Funds of Australia (ASFA) said the draft legislation responds to the very real concerns it had shared with the Government about the impact on fund members.
"Some fund members would have taken a direct hit on their accounts if fund mergers which occurred from 1 October 2011 were not provided the capital gains tax (CGT) relief for funds carrying capital losses," said ASFA chief executive Pauline Vamos.
ASFA will examine the detail of the legislation and respond with a submission in due course, said Ms Vamos.
The CGT rollover relief, initially introduced as a result of the global financial crisis, allowed newly merged entities to carry forward a capital loss to future tax years, ameliorating losses in member accounts. However the relief ended on 30 September 2011.
"ASFA has consistently advocated for permanent relief in our discussions with Government but at a minimum has recommended the relief apply through the Stronger Super reform period," said Ms Vamos.
"Without the CGT relief, mergers would lead to members of merging funds suffering tax-related losses of up to two per cent in regard to their account balance. Or they would fail to go ahead all together, leading to higher costs and less benefits for members.
"We are pleased to see that relief is likely to cover the period from 1 October 2011 onwards and that the Government has acknowledged the concerns we raised about integrity measures.
"The collaborative advocacy efforts involving many super funds contributing details of their situations to Treasury and Treasurer's adviser has clearly illustrated the issue in a compelling way."
For media inquiries, please contact:
Pauline Vamos, CEO, 0433 169 342
Rebecca Glenn, GM Marketing and Communications, 0416 170 439
Megan McDougall, Media and Communications Coordinator, (02) 8079 0849
About ASFA - the voice of super
The Association of Superannuation Funds of Australia is the peak industry body for superannuation and retirement policy and research. ASFA is the only organisation that represents all types of superannuation funds (retail, industry, corporate and public sector) and associated service providers. ASFA members manage or advise on the bulk of the $1.3 trillion in superannuation assets as at September 2011. Its members represent over 90 per cent of the approximately 12 million Australians with superannuation.