The Mid-Year Economic and Fiscal Outlook contains changes relating to superannuation accounts.
Changes to lost super accounts
The Government will introduce the following reforms:
•The account balance threshold below which inactive accounts, and accounts of uncontactable members, are required to be transferred to the ATO will be increased from $200 to $2,000;
•Interest will be paid at a rate equivalent to Consumer Price Index (CPI) inflation from 1 July 2013 on all lost superannuation accounts reclaimed from the ATO; and
•The period of inactivity before an account of an unidentifiable member is required to be transferred to the ATO will be reduced from five years to 12 months.
The reforms to the transfer of lost accounts to the ATO will take effect from 31 December 2012. The ATO will use its data matching resources to match these lost accounts with members.
Deceased estates
The Government will amend the law to allow the pension earnings tax exemption to continue following the death of a pension recipient until the deceased member’s benefits have been paid out of the fund.
This will benefit the beneficiaries of deceased estates by allowing superannuation fund trustees to dispose of pension assets on a tax-free basis to fund the payment of death benefits. It will also avoid the need for funds to rework tax calculations following the death of members in the pension phase.
These changes will apply to the 2012‑13 and later income years.
Super fund mergers
The Government will ensure that superannuation fund members are not disadvantaged where their benefits are rolled over within a fund or between funds. Currently, the superannuation tax laws provide for a ‘proportioning rule’, which is an integrity rule designed to remove individual members’ capacity to reduce their tax liability by manipulating the ‘taxable’ and ‘tax-free’ components of their superannuation benefits.
As an integrity rule addressing the behaviour of individual members, the proportioning rule was intended to apply only to transactions that are within the control of the individual members. The Government will introduce legislation, to apply from 1 July 2013, to clarify that this integrity rule does not apply to transactions that are beyond the control of individual members.
The Government will give merging superannuation funds greater flexibility by making the following changes to the taxation relief to support Stronger Super:
• backdating the taxation relief for mergers to apply from 1 October 2011;
• extending the relief to all revenue assets regardless of the net position of the entity;
• removing the 12-month rule which prevents certain losses from being transferred;
and
• ensuring that members transferred under MySuper retain the right to claim a personal tax deduction in the new fund.
