The Treasury Laws Amendment (2020 Measures No. 1) Bill 2020 has been introduced into the House of Representatives to provide permanent relief from CGT liabilities to superannuation funds in the event of fund mergers and transfer events’. Under current law this relief will expire on 1 July 2020.

The transfer of assets from one superannuation fund to another, under a merger between the two funds, will typically trigger a CGT event. Therefore, the asset transfer will lead to the realisation of capital gains and/or capital losses for the transferring fund. Following this asset transfer and the transfer of members’ accounts to the receiving fund, the transferring fund will typically be wound up.

Similarly, revenue losses, such as foreign exchange losses, are also extinguished on the ending of an entity. Revenue losses also have a value as they can be offset against current year income, or carried forward where the entity continues to exist. However, where there is a merger and the transferring entity ceases to exist, the value of the revenue losses is also extinguished.

Under the Bill a merging superannuation fund may choose loss relief and have access to asset roll-over where the transferring entity transfers assets to the receiving entity.

The tax relief available under Division 310 for merging superannuation funds is permanent.

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