Transitional capital gains tax relief for super funds

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To support super funds to comply with changes to the super system that start on 1 July 2017, the government has introduced transitional capital gains tax (CGT) relief for affected funds.

Transitional CGT relief is available to super funds for certain CGT assets that will lose the tax exemption:

  • by complying with the new transfer balance cap
  • as a result of transition-to-retirement income stream (TRIS) reforms commencing.

CGT relief must be chosen by a trustee for a CGT asset. The asset must have been held by the fund throughout the period 9 November 2016 to midnight 30 June 2017.

There are two new questions in the CGT schedule for transitional CGT relief. It applies to certain CGT assets held by a complying SMSF at all times between the start of 9 November 2016, to ‘just before’ 1 July 2017.

If CGT relief is chosen, the trustee must advise us in the 2017 CGT schedule:

  • that they have chosen for the CGT relief to apply at question 8F
  • any capital gain deferred to a later year at question 8G

A fund must report the above on, or before, the day they are required to lodge their fund’s 2017 tax return. This decision is irrevocable.

Increasing access to company losses

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At the time of publishing, these changes had not become law.

On 30 March 2017, legislation was introduced into parliament that will supplement the current ‘same business test’ for company losses with a more flexible 'similar business test'. The new test will enable greater access to past year losses when companies enter into new transactions or business activities. The similar business test will allow a company to access losses following a change in ownership where its business, while not the same, is similar. As a test for accessing past year losses, the 'similar business test' will only be available for losses made in income years starting on or after 1 July 2015. The 'same business test' and the 'similar business test' will be collectively known as 'business continuity test'. This measure is expected to take effect in relation to income years starting on or after 1 July 2015.