The Assistant Treasurer and Minister for Financial Services and Superannuation, the Hon Bill Shorten MP, today announced the Government will extend the temporary loss relief for merging superannuation funds from 30 June 2011 to 30 September 2011.
Superannuation funds that are currently in the process of merging will have additional time to complete their mergers and still qualify for the temporary loss relief for complying superannuation funds mergers.
The Government has received feedback that, due to the complexity of fund mergers, existing transactions may well be completed after 30 June 2011, meaning members would not qualify for the tax relief.
"A modest extension of the loss relief will allow existing mergers to be completed in an orderly fashion, which assists fund members," Mr Shorten said.
The temporary loss relief was introduced in response to the uncertain financial market conditions faced by superannuation funds in late 2008. The loss relief allows funds to transfer losses when they merge that would otherwise be extinguished when the merging fund is wound up. These losses are valuable because they can then be offset against capital gains in future years.
The three month extension is provided in recognition of the complexity of the larger superannuation fund mergers that are already in progress. The existing requirement for the loss relief that mergers must be completed within a single income year, will also necessarily be relaxed to allow affected funds to benefit from the extension.
The Government does not intend to provide any further extensions of this temporary loss relief or to make it permanent. However, the Government announced as part of the Stronger Super reforms that it supports in principle appropriate loss relief for superannuation funds required by the Australian Prudential Regulation Authority to merge in order to meet MySuper licence conditions.