Income tax relief for MySuper transfers

The Assistant Treasurer, The Hon Josh Frydenberg MP, has announced that an anomaly in the income tax law will be fixed so that super funds that transfer to a MySuper product within the same super fund will be able to take advantage of the same tax relief that is currently provided for transfers into a different super fund.

The changes (effective from 29 June 2015) are:

•  A complying super fund that mandatorily transfers the account balances of its default members to a MySuper compliant product offered by the fund will be able to defer the income tax consequences for assets transferred as a result of mandatory transfers of member balances within the same super fund. By applying an asset roll-over, a liability will not arise until the asset is ultimately disposed by the transferee entity.
• To access this relief the relevant MySuper product will need to be offered through the same type of structure as the default product.
• Where the super fund invests in a life insurance company or a pooled superannuation trust to support its default members, the same relief will apply.
• This asset roll-over will apply at the membership interest level and to the interposed entities that dispose of assets pursuant to the transfer.
• This roll-over will apply to the initial transfer of members’ account balances from default products to MySuper products, and will not extend to any rebalancing which may occur after the initial transfer.
• The relief will not extend to the transfer of losses.
• Self-managed super funds will be excluded from the relief because the MySuper requirements do not apply to them.

Super funds are required to transfer the existing balances of super fund members who are in default products to a MySuper product by 1 July 2017.

The Assistant Treasurer’s announcement is available here