On 13 April 2017, the Government has released an exposure draft of legislation and associated draft explanatory material for public consultation. This legislation will amend the Income Tax Assessment Act 1997 to give effect to tax reforms announced on 29 June 2015, which expand the tax relief available to superannuation funds, when mandatorily transferring assets as part of the transition to the MySuper rules.
The purpose of the consultation is to seek industry views on the proposed expanded tax relief.
Superannuation funds are required to transfer the existing balances, of members who are in default products, to MySuper products by 1 July 2017. Tax relief is currently provided for these transfers into a different superannuation fund, but not for transfers within the same fund structures. Tax relief will be expanded to apply to mandatory transfers within the same fund structure.
This tax relief will provide an asset roll-over which will apply to transfers made between 29 June 2015 and 1 July 2017.
Extract from Draft Legislation
311-1 What this Division is about
This Division provides tax relief for certain entities if a member’s accrued default amount is required to be transferred to a MySuper product.
If the transfer is to a MySuper product in another complying superannuation fund, a trustee of a complying superannuation fund, a life insurance company, or a trustee of a pooled superannuation trust, that satisfies certain conditions can:
(a) choose to transfer a loss; or
(b) choose an asset roll-over; or
(c) choose to transfer a loss and choose an asset roll-over.
If the transfer is to a MySuper product in the same complying superannuation fund, a trustee of the complying superannuation fund, a life insurance company, a trustee of a pooled superannuation trust, or the trustee of an interposed trust, that satisfies certain conditions can choose an asset roll-over.
Note 1: This Division will be repealed on 2 July 2019: see Part 3 of
Schedule 1 to the Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Act 2013.
Extract from Explanatory Memorandum
Context of amendments
- MySuper products were introduced to improve the experience of superannuation members that accept the default option offered by their employer, by placing them in products that are appropriate and ensure their financial interests are protected.
- The transition to MySuper products must be completed by 1 July 2017.
- As a transfer of a default member’s account balance may create an income tax liability from the realisation of fund assets, asset roll‑over relief is currently available for such a transfer to a MySuper product in another superannuation fund to ensure that the default members are not disadvantaged.
- Schedule # to this exposure draft Bill will extend the asset roll‑over relief to mandatory transfers to a MySuper product within a superannuation fund. This will ensure that default members of superannuation funds will not incur adverse and unintended consequences when their account balances are transferred to a MySuper product within the fund.
[Treasury website: Consultation Page; Draft Legislation; LTN 71, 18/4/17]