Merging superannuation funds
The temporary tax relief for merging superannuation funds is now permanent. Under tax relief Division 310 of the Income Tax Assessment Act 1997 merging complying superannuation funds can, subject to certain conditions:
- transfer revenue and capital losses
- defer taxation consequences on gains and losses from revenue and capital assets.
From 1 July 2020 the temporary tax relief for merging superannuation funds was made permanent. Since December 2008, tax relief under Division 310 of the Income Tax Assessment Act 1997 has been available for merging complying superannuation funds to transfer revenue and capital losses, and to defer taxation consequences on gains and losses from revenue and capital assets, subject to funds meeting certain conditions.
For more information, see Successor fund transfer reporting.
No-TFN tax offset and successor funds amendment
Successor funds may now claim the no-TFN tax offset in an income year for no-TFN contributions income tax previously paid by the original fund where:
- the original fund paid tax in any of the previous three income years or relevant part years for an amount of no-TFN contributions income of a member
- the member had never quoted their TFN to the earlier fund, and
- the member has quoted their TFN to the successor fund for the first time in the income year.
The amendment applies from the 2020-21 income year, meaning that superannuation providers that are a successor fund who have a TFN quoted for the first time in the 2020-21 income year may be able to claim the tax offset for tax paid on no-TFN contributions income by the original fund from the 2017-18 income year.
Closure of Eligible Rollover Funds
The Treasury Laws Amendment (Reuniting More Superannuation) Bill 2020, that facilitates the closure of Eligible Rollover Funds (ERF) has passed and received Royal Assent on 22 March 2021.
The reporting and payment of ERF accounts will be due and payable by:
- 30 June 2021 - for ERF low balance accounts (less than $6,000)
- 31 January 2022 - for all other accounts held by ERFs.
Changes to the Significant global entity (SGE) definition
The SGE definition has been broadened to ensure that it applies consistently across all types of entities, irrespective of whether they are a member of a group that is consolidated for accounting purposes.
An entity is an SGE for a period if:
- it is a global parent entity with an annual global income of A$1 billion or more.
- it is a member of a group of entities consolidated for accounting purposes, and one of the other group members is a global parent entity with an annual global income of A$1 billion or more.
- it is a member of a notional listed company group, and one of the other group members is a global parent entity with an annual global income of A$1 billion or more.
- it, or any other member of the actual or notional accounting consolidated group of which it is a member, has been given a notice by the Commissioner determining that its global parent entity would have an annual global income of A$1 billion or more for any period during the income year.
A notional listed company group is a group of entities that would be required to be consolidated as a single group for accounting purposes if a member of that group was a listed company. Any exceptions in accounting principles that may permit an entity not to consolidate with other entities are disregarded.
The SGE status of an entity must be recorded in the Fund income tax return.
Changes to the Country-by-country (CBC) reporting entity definition
The scope of an SGE is now wider than the scope of entities required to undertake CBC reporting. A new definition of ‘country by country reporting entity’ (CBC reporting entity) has therefore been introduced. In effect, a CBC reporting entity is an entity that would be an SGE, had the definition of an SGE permitted the exception to consolidation related to investment entities in the accounting principles.
An entity is a CBC reporting entity if:
- it is not an individual, and
- a CBC reporting parent, or
- a member of a CBC reporting group, and one of the other group members is a CBC reporting parent with an annual global income of A$1 billion or more.
A CBC reporting group may be, for accounting purposes:
- a single group, or
- a notional listed company group.
A CBC reporting group may be a group that is consolidated for accounting purposes as a single group, or a notional listed company group.
A notional listed company group is a group of entities that would be required to be consolidated as a single group for accounting purposes if a member of that group was a listed company.
When determining whether an entity is a CBC reporting entity, apply the investment entity exception in the accounting principles; that is, unlike the SGE definition, the exception to consolidation in the accounting principles related to investment entities is not disregarded.
If an entity is a CBC reporting entity, it will have CBC reporting obligations. CBC reporting obligations depend on whether an entity was a CBC reporting entity at any time in the preceding income year.
The CBC reporting entity status must be recorded in the AMIT tax return.