Income tax relief for MySuper transfers within a fund
Tax relief is currently provided for MySuper transfers into a different super fund, but not for transfers within the same fund.
On 29 June 2015, the government announced that capital gains tax relief will be extended to MySuper transfers within a super fund, where the transfer is required by law. The law will apply retrospectively from 29 June 2015.
This measure enables a complying super fund which, under the law, has to transfer the account balances of its default members to a MySuper compliant product offered by the fund to defer the income tax consequences for assets transferred as a result of the transfer.
Legislation and supporting material
This change is not yet law and is subject to the normal parliamentary process.
The ATO will accept tax returns as lodged during the period up until the outcome of the proposed amendment is known. In addition, past year assessments will not be reviewed until the outcome of the proposed amendment is known.
Once the outcome of the proposed amendment is known, taxpayers will need to review their positions back to their 2014-15 income year.
If the proposed law is passed by parliament, the following arrangements will apply.
- Those taxpayers who anticipated the law and transferred account balances into a MySuper compliant product would not have incurred a capital gains tax liability. These taxpayers do not need to do anything more.
- Those taxpayers who did not anticipate the law and transferred account balances into a MySuper compliant product may have realised a capital gains tax liability. These taxpayers can lodge requests for an amended assessment, and if a reduction in liability results, interest on overpayment will be paid in accordance with the Taxation (Interest on Overpayments and Early Payments) Act 1983 (for more information, please see Law Administration Practice Statement PS LA 2011/23 – Credit interest).
The ATO will provide further advice if the proposed law change is not enacted.
The new measure is intended to extend the income tax relief for MySuper transfers within the same super fund structure.