Super reform passes Parliament

Parliament has passed a package of reforms that the Gillard government believes will improve superannuation law.

The changes include superannuation capital gains tax relief and measures to implement the government’s Stronger Super commitments.

The Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 and the Superannuation Auditor Registration Imposition Bill 2012 both passed through Parliament yesterday (Thursday November 22).

“The measures further build on the government’s existing reforms to improve the efficiency and integrity of the superannuation system, which will increase the retirement outcomes for Australians,” said Minister for Superannuation Bill Shorten.

Merging superannuation funds

One of the changes sees the restoration of temporary tax relief in the form of loss relief and asset rollover for mergers of superannuation funds with some amendments.

From October 1, 2011 to July 1, 2017, superannuation funds that merge can roll over unrealised gains or losses on revenue and capital assets and allow the transfer of realised revenue losses and capital losses.

This taxation relief removes certain tax impediments to superannuation funds merging to achieve efficiencies and cost reductions for members in response to the Stronger Super reforms.

SMSF auditor registration

The bill will also establish a new registration regime for self-managed superannuation fund (SMSF) auditors, commencing on January 31, 2013.

The measure will require auditors to register with ASIC and satisfy a range of minimum standards.

“As part of SMSF auditor registration, all auditors of SMSFs will be required to meet initial and ongoing requirements relating to their qualifications, competency and independence,” said Shorten.

The SMSF sector currently has over $400 billion, with members advised by a range of experts including auditors.

Expanded superannuation reporting

The new legislation will expand the information that must be reported by superannuation providers to their members.

Under the revised reporting obligations, superannuation providers will be required to provide statements for all members who held an interest in the fund at any time during the reporting period, not just those for whom contributions are received.

“It has been estimated that the Australian superannuation industry processes more than 100 million transactions annually,” said Shorten.

“The potential gains to the system from the effective electronic processing of transactions in superannuation are significant.”

Currently, poor member-information quality often leads to difficulties in allocating contributions, unnecessary duplicate accounts and a large amount of lost and unclaimed superannuation.

The Association of Superannuation Funds of Australia (ASFA) welcomed the news.

“The passage of key pieces of superannuation legislation the Senate today will enable the superannuation industry to get working to implement changes that will in the long term increase retirement savings of Australians,” said Pauline Vamos, CEO of ASFA.

“ASFA particularly welcomes the passage of laws that will provide superannuation funds that merge with capital gains taxation relief. Without this piece of legislation the existence of tax losses that would be written off in the event of a merger would have meant that in many cases superannuation trustees were not able to enact a merger without costing members thousands of dollars.”