Register  
Calls for CGT merger relief
Friday, 13 April 2012 12:25pm

Lack of clarity around the Government's intention for providing capital gains taxation relief for superannuation mergers is damaging members and limiting MySuper outcomes, according to AustralianSuper and ASFA.

With the rising trend of super fund mergers in the lead up to the introduction of the Government's Stronger Super reforms, the Association of Superannuation Funds of Australia (ASFA) has argued that it is fitting for the Government to provide CGT merger relief through the transition period.

"To date, the Government has yet to provide a statement on whether it will or will not provide relief. The lack of certainty is now impacting on the super industry's ability to transition efficiently to MySuper," said Pauline Vamos, ASFA chief executive.

"... ASFA has argued that where the Government introduces significant regulatory changes that have impacts on the structure of the superannuation industry then it is 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."

Vamos said often funds are put off mergers due to the loss of the value of the Deferred Tax Assets which impacts on members.

ASFA said that super funds are currently carrying Deferred Tax Assets equivalent to between 1% and 3% of member account balances, where trustee fiduciary duties would prevent a merger progressing if it would result in a significant loss to members.

"If the Government has decided not to provide CGT merger relief then ASFA believes that it should announce this in order to end industry uncertainty. The Government should in this case acknowledge that the overall benefits of introducing MySuper will be reduced, and that in fact some funds may need to increase fees in order to compete in the new environment when they may otherwise have merged," said Vamos.

Ian Silk, chief executive of AustralianSuper, agreed with ASFA's position and said that the uncertainty is preventing mergers from occurring and disadvantaging members.

"AustralianSuper firmly believes that members of funds in a merger, must not be placed in a worse tax position after a merger than before the merger," said Silk.

"This is a revenue-neutral policy for the Government, because if this change is not made most trustees will simply not proceed with mergers whilst there is a financial disadvantage to their members."

Blogs
Follow the industry experts.
Christopher Page
Christopher Page
Managing Director

A new regulator? Better empower ASIC
The Australian financial services industry and Australia's financial advisers already have regulator dedicated to policing standards ...read more
 
Benjamin Ong
Benjamin Ong
Chief Economist

Reflation, rotation and the taper
'Tis being my final type (drivel, to some gentle readers) for the year, we'll take a look back at the 2013 that was to seek the lessons ... read more
 
Alex Dunnin
Alex Dunnin
Director of Research & Editorial Services

Thought leadership and the art of living dangerously
Superannuation is one of the Australian economy's major pillars and it is time its leaders stepped out from behind their abacuses and ... read more
News Search   
VideoBrought to you by
Introduction to Series #07
What are the key challenges advisers face when building retirement portfolios for clients? Watch Joe Fernandes, Head of Global Investment Solutions at Colonial First State Global Asset Management. Watch video
Why Multi-Asset Solutions?
Joe Fernandes, Head of Global Investment Solutions at Colonial First State Global Asset Management talks about the advantages of objective-based investing in the multi-asset space. Watch video
Colonial First State Multi-Asset Real Return Fund
Find out more about the investment philosophy and objective of the Colonial First State Multi-Asset Real Return Fund. Senior Portfolio Manager, Kej Somaia explains. Watch video
Managed Accounts Forum 2014 Highlights
Around 150 delegates attended Financial Standard's inaugural Best Practice Forum in Managed Accounts held in Sydney in August. Financial Standard also launched a new magazine: FS Managed ... Watch video
The New Neutral
At this year's PIMCO Secular Forum, the company's global executives set themselves the challenge of taking a three to five year view and anticipate where the market would be against what investors would ... Watch video
Zurich Investments Global Growth Share Fund
The pool of investable funds in the retail sector is ever growing, and as investors become more sophisticated the appetite for global equities is only going to increase. In this video, Noble says with ... Watch video
Get it
Daily
FREE to your inbox, get the Financial Standard Daily Email.
Get the Free
iPad app
Download the Financial Standard iPad app for FREE
Industry
Events
OCT
31
NOV
05
ALTERNATIVE INVESTMENTS 2014 CONFERENCE
12
Global CIOS Symposium
13
2014 Financial Standard Social Media Influence, Leadership + Excellence Scholarship Program (SMILEYS)
21
SelectingSuper Awards 2014
DEC
02
FEAL - La Trobe Financial National Achievement Awards
News
Bites

$245 (inc GST) for 1 year
 
 
Copyright © 1992-2014 Rainmaker Group
All material on this site is subject to copyright. All rights reserved. No part of this material may be reproduced, translated, transmitted, framed or stored in a retrieval system for public or private use without the written permission of the publisher.
Link to something OrHNYlSa