Time to pursue permanent merger rollover relief

The superannuation industry has been told it is time to press the Government for permanent fund merger rollover relief.

In an analysis published this month, KPMG has urged that the superannuation funds be granted equivalent treatment with corporations where mergers are concerned.

Discussing the scheduled expiry of capital gains tax rollover relief for fund mergers after 2 July, this year, KPMG said this was inconsistent with the Government's requirement that funds consider scale and efficiency so as to increase value to members.

The analysis said that there would always be both costs and benefits for superannuation fund trustees to consider in respect to mergers but, given the Government's broader policy settings, "tax and especially the early payment of tax should not be an impediment to mergers".

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"It is time for the superannuation industry to press the Government for permanent relief, in the same way that equivalent relief is available in the corporate world," the KPMG analysis said.

It said the policy imperative was clear — "there is no cost to the Government, which continues to receive the tax on the gains when normal sales occur. However, there is a cost to members, if otherwise viable mergers do not proceed or are delayed, due to tax tipping the balance".