POWERED BY MOMENTUM MEDIA
Increased tax implications from early access and switching
Superannuation funds needs to consider tax implications especially with the increased selling of assets due to members using the early access to super hardship scheme and switching to cash, according to GBST.
GBST client relationship manager and tax subject matter expert, Elly Grace, said when members pulled out their money from the super funds, the negative tax consequences were pushed on to the remaining members.
She said there had been a lot of trading activity caused by early access scheme and members switching from balanced and high growth products into cash.
As tax issues only rose when funds were trading, Grace said fund managers that super funds used needed to be incentivised to manage the tax outcomes as opposed to being incentivised pre-tax.
Grace noted that the Australian Prudential and Regulation Authority (APRA) was now comparing funds on an after-tax basis so it was crucial super funds manged their tax outcomes for better member outcomes.
“There are ways for the fund to ensure they get the best possible tax outcome when they’re making those trades. They could choose stocks or parcels of stocks that don’t have a negative tax consequence and then they could choose different stocks that have a different tax profile as well,” she said.
“This way they can manage their tax consequences by finding trades that have a better tax outcome.”
Grace said there was technology that allowed super funds and fund managers to query their trade to see what the tax consequence could be before the trade was made.
“They can also query if there will be a negative franking credit implication of selling those particular stocks on the day,” she said.
She noted that some fund managers were initially reluctant to use such technology but when super funds incentivised them to manage the tax outcome, they “saw the benefit and could generate better returns for members”.
Recommended for you
The mega fund has announced a $2.2 billion investment in a leading data centre platform, bringing its global real assets portfolio to nearly $60 billion.
In this latest edition, Australian Retirement Trust’s head of global real assets Michael Weaver explains the fund’s approach to finding new opportunities as it surpasses $300 billion in funds under management.
Fund managers remain hopeful for a Chinese revival story despite the “disappointing” stimulus package announced this week.
In this latest edition, Darren Spencer, lead investment director at Mercer, shares the fund’s process in assessing opportunities in a shifting investment landscape.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
Spire Oaktree Opportunities XI Second Close
61.07 3 y p.a(%)
2
Spire Oaktree Opportunities XI First Close USD
59.21 3 y p.a(%)
3
DomaCom Lot 21 Chellaston Road Munno Para West SA 5115 Australia
32.57 3 y p.a(%)
4
Fidante Credit Suisse Global Private Equity
32.09 3 y p.a(%)
5
DomaCom 4/27 Crombie Avenue Bundall QLD 4217 Australia
27.42 3 y p.a(%)
