Bill's Media Releases

Media Release: Tax relief for superfund mergers helps to lower fees

Superfund members will benefit from Government tax relief that enables superfunds to merge without triggering adverse tax consequences that would hit members’ savings.  

The Gillard Government will change the income tax law to support the implementation of its MySuper reforms by encouraging fund mergers that lower fees and costs for members.

“The Gillard Government is reforming superannuation so that fees and costs are lower.  The tax relief announced today removes a barrier that would have prevented otherwise sound superfund mergers from proceeding,” the Minister for Financial Services and Superannuation said.

Estimates undertaken by superfund AGEST about the impact of their proposed merger with Australian Super, show a 38 year old female worker earning around $44,000 will have $14,000 more in retirement savings thanks to the efficiency gains from the proposed merger.

Given the potential benefits to members of industry consolidation and the possible costs for some entities transitioning to MySuper, the Government will provide:

  • from 1 June 2012 to 1 July 2017, optional loss relief for mergers of complying superannuation funds on the same terms and conditions as the former temporary loss relief with some exceptions including an optional roll-over for capital gains and appropriate integrity provisions (see Attachment); and 

  • from 1 July 2013 to 1 July 2017, an optional roll-over and loss relief for capital gains and capital losses on mandatory transfers of default members’ benefits and relevant assets to a MySuper product in another complying superannuation fund.

Self-managed superannuation funds will be excluded from the relief because the MySuper requirements do not apply to them (see Attachment).

A proposals paper will be released in the next few weeks and the Government expects the legislation to be introduced into parliament in the second half of the year.  More information on how to make a submission will be available on the Treasury website. The Government will release an exposure draft of the legislation as soon as is practicable after the consultation on the policy design.



Integrity provisions

The integrity provisions will include:

  • losses that are transferred to the receiving entity will be treated as having been made in the income year that they were transferred. 

–             This prevents the continuing superannuation fund from using the losses to offset gains in earlier income years.

  • losses realised in the 12 months prior to a merger from the disposal of assets from a transferring entity to an entity that becomes a receiving entity in a merger, where those assets are still held by that entity will not be able to be transferred to that entity.

–             This will prevent the transfer of losses in respect of disposals of assets from the transferring entity to the receiving entity, as that would in effect provide early access to losses in respect of an asset which continues to be held by the receiving entity.  This will not affect the receiving entity where it purchases on-market (for example, via the ASX) assets that were owned by the transferring entity.

The MySuper loss relief will also treat transferred losses as having been made in the income year that they were transferred.

Exclusion of self-managed superannuation funds (SMSF)

The MySuper requirements will not be applicable to SMSFs.  Therefore, extending the loss relief and capital gains tax roll-over to SMSFs is not warranted.