The Federal Government has ruled out a permanent capital gains tax (CGT) rollover relief for super funds, as it announced an extension of the relief by three months until 30 September 2011.
"The Government does not intend to provide any further extensions of this temporary loss relief or to make it permanent," Minister for Financial Services and Superannuation Bill Shorten said yesterday.
The Australian Institute of Superannuation Trustees (AIST) welcomed the extension, but warned that the temporary three month extension did not go far enough. The announced extension did not give super funds enough time to properly plan and complete mergers, particularly when the industry was still awaiting finer details of the current Stronger Super reform process.
Despite the government's firm statement on future extensions, AIST intends to ask the Government to extend the CGT relief deadline to 1 July 2013, the date at which MySuper can be offered for the first time by super funds.
"MySuper is a key reason why some funds are considering a merger so it makes sense that CGT relief be extended long enough for funds to have enough time to absorb the details of the MySuper and the other Stronger Super arrangements as they are released later this year," AIST chief executive Fiona Reynolds said.
The Association of Superannuation Fund of Australia (ASFA) expressed yesterday its appreciation to the Government for listening to the industry's concerns, but AFSA chief executive Pauline Vamos admitted it was less than what they hoped for.
"We asked for three years and we got three months, but at least it is something," Vamos said.
She said the extension allowed for mergers in progress to proceed.
The Government supported in principle the appropriate loss relief for super funds required by the Australian Prudential Regulation Authority (APRA) to merge in order to meet MySuper licence conditions.
As part of Stronger Super, the trustee of each MySuper product will be required to examine and conclude annually whether its MySuper products have sufficient scale in terms of assets and number of members to continue to provide optimal benefits to members.
APRA will develop prudential standards on the trustee's requirements to meet this obligation.
Vamos said the in-principal support left the door open to address CGT rollover relief for funds that operate legacy products.
