Some of Australia’s largest superannuation funds are paying more tax than is necessary due to poor management of capital gains tax and franking credits, says GBST.
Super funds are paying more than $6 billion in excess tax annually due to poor tax management practices, according to financial service software firm GBST.
A recent research article by GBST business solutions executive Kathy Taylor-Hofmann lays out the ways super funds can optimise their management of capital gains tax and franking credits.
First, said Ms Taylor-Hofmann, super funds are entitled to a one-third tax discount if assets are held for more than 12 months before any are sold.
"Billions of dollars each year can be retained for members by preventing assets being sold too early and therefore not receiving the 33.33 per cent discount on the tax," she said.
Second, super funds can do a much better job of managing their dividend income and imputation credits, Ms Taylor-Hofmann said.
"Superannuation funds are only eligible to receive that tax rebate if shares are held for enough time (45 days, on ordinary shares) before the dividend is declared. If a share is sold within the 45 days, the franking credit is lost," she said.
"The difficulty for superannuation managers is the volume of shares that they deal with across multiple managers."
According to new research, retirees will need to accumulate more than half a million dollars in super, before their income will stop eroding...
Shine Lawyers has filed a class action against Colonial First State Investments, claiming hundreds of thousands of its fund members have see...
We need to rethink the concept of retirement and get used to the idea of working into our senior years, according to the Credit Suisse Resea...