Care/Asset merger unlikely without CGT loss relief

6 December 2011
| By Tim Stewart |
image
image
expand image

The merger of Care Super and Asset Super is unlikely to go ahead if the Government does not provide the merged entity with capital gains tax (CGT) loss relief, according to Care chief executive Julie Lander.

The two superannuation funds are currently reviewing the business case and beginning due diligence, with the merger on track to take place in September 2012 - but ideally it would take place by 1 July 2012, Lander said.

However, without CGT loss relief in place it would be hard to justify the reduction in members' accounts created by the merged entity's loss of deferred tax assets (DTAs), Lander said.

The Government's CGT loss relief for merging superannuation funds was extended for three months until September 2011, but industry bodies such as the Australian Institute of Superannuation Trustees are lobbying the Government to make the relief permanent. The industry is keenly awaiting Treasury's advice to Minister for Superannuation Bill Shorten on the subject, added Lander.

"The merger is for the good of members, and it would be very hard to mount a case [whereby] the fund would strip members of any percentage [of their accounts]. Most superannuation funds have quite significant DTAs at the moment," she said.

"If you lose the DTA and it disappears, then that has an effect on superannuation funds available to pay members, so you basically have to reduce their accounts," Lander added.

Since the primary purpose of a merger was to benefit members, Lander said it would be very hard to mount the case to members without the CGT relief - "not only for Care Super and Asset Super, but for any two superannuation funds".

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest developments in Super Review! Anytime, Anywhere!

Grant Banner

From my perspective, 40- 50% of people are likely going to be deeply unhappy about how long they actually live. ...

11 months ago
Kevin Gorman

Super director remuneration ...

11 months 1 week ago
Anthony Asher

No doubt true, but most of it is still because over 45’s have been upgrading their houses with 30 year mortgages. Money ...

11 months 1 week ago

Jim Chalmers has defended changes to the Future Fund’s mandate, referring to himself as a “big supporter” of the sovereign wealth fund, amid fierce opposition from the Co...

1 day 10 hours ago

Demand from institutional investors was the main driver of growth in Australia’s responsible investment (RI) market in 2023, as the industry continued to gain momentum....

1 day 10 hours ago

In a new review of the country’s largest fund, a research house says it’s well placed to deliver attractive returns despite challenges....

1 day 11 hours ago