Superannuation funds and their custodians are facing substantial new costs as a result of the superannuation tax changes announced in the last Federal Budget.
Just a week out from the 2017/18 Federal Budget, the Association of Superannuation Funds of Australia (ASFA) has pointed to a series of shortcomings and concerns emanating from the Treasury Laws Amendment (2017 Measures No. 2) Bill 2017.
One of the most important issues raised by ASFA is the transitional rules introduced to provide capital gains tax (CGT) relief, with the organisation warning that the design of the relief for large unsegregated funds “presents significant practical challenges”.
“The new $1.6 million transfer balance cap under Division 294, along with the change to the treatment of transition to retirement income streams (TRISs) where the member has not satisfied a specified condition of release… will have the effect of reducing the Exempt Current Pension Income (ECPI) proportion of large unsegregated superannuation funds’ assets,” it said.
The submission then went on to warn that “the single biggest impediment is that a number of the custodians providing services to superannuation funds, on which funds rely for their broader CGT reporting, have indicated that significant system upgrades to their tax reporting and underlying IT systems will be necessary to accommodate the relief”.
It said the main challenges included the need to:
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