Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Act 2013 (89 of 2013)

Schedule 1   Loss relief and asset roll-over for transfer of amounts to a MySuper product

Part 1   Main amendment

Income Tax Assessment Act 1997

1   After Division 310

Insert:

Division 311 - Loss relief and asset roll-over for transfer of amounts to a MySuper product

Table of Subdivisions

Guide to Division 311

311-A Object of this Division

311-B Choosing loss transfers and asset roll-overs

311-C Consequences of choosing to transfer losses

311-D Consequences of choosing asset roll-over

311-E Choices

Guide to Division 311

311-1 What this Division is about

This Division provides tax relief for certain entities if a member's accrued default amount is required to be transferred to a MySuper product in another complying superannuation fund.

A trustee of a complying superannuation fund, a life insurance company or a trustee of a pooled superannuation trust that satisfies certain conditions can:

(a) choose to transfer a loss; or

(b) choose an asset roll-over; or

(c) choose to transfer a loss and choose an asset roll-over.

Note 1: This Division and associated provisions will be repealed on 2 July 2019: see Part 3 of Schedule 1 to the Superannuation Laws Amendment (MySuper Capital Gains Tax Relief and Other Measures) Act 2013.

Note 2: Part 2C of the Superannuation Industry (Supervision) Act 1993 provides rules about MySuper products.

Operative provisions

Subdivision 311-A - Object of this Division

Table of sections

311-5 Object

311-5 Object

The object of this Division is to ensure that default members of *complying superannuation funds are not adversely affected if their *accrued default amounts are compulsorily transferred to MySuper products in other complying superannuation funds.

Subdivision 311-B - Choosing loss transfers and asset roll-overs

Table of sections

311-10 Certain entities can choose transfer of losses, asset roll-overs, or both

311-10 Certain entities can choose transfer of losses, asset roll-overs, or both

(1) If an *arrangement is made for which the conditions in this section are satisfied, a trustee of a *complying superannuation fund, a *life insurance company or a trustee of a *pooled superannuation trust (the transferring entity ) can:

(a) choose to transfer a loss; or

(b) choose an asset roll-over; or

(c) choose to transfer a loss and choose an asset roll-over.

Entity must hold certain assets

(2) The first condition is satisfied if, just before the *arrangement was made:

(a) for an entity that is a trustee of a *complying superannuation fund (the original fund ) - its assets included assets other than:

(i) a *complying superannuation/FHSA life insurance policy; or

(ii) units in a *pooled superannuation trust; or

(b) for an entity that is a *life insurance company - a complying superannuation/FHSA life insurance policy issued by the entity was held by a complying superannuation fund (the original fund ); or

(c) for an entity that is a trustee of a *pooled superannuation trust - units in the entity were held by a complying superannuation fund (the original fund ).

Transfer of accrued default amount and membership of continuing fund

(3) The second condition is satisfied if:

(a) under the *arrangement, the original fund transfers, to a *complying superannuation fund (the continuing fund ), an *accrued default amount of a person who is a member (within the meaning of the Superannuation Industry (Supervision) Act 1993); and

(b) the amount is transferred to the continuing fund:

(i) as a result of an election made under paragraph 29SAA(1)(b) of that Act; or

(ii) under section 388 of that Act; and

(c) the member is a member of the continuing fund immediately after the time that the transfer occurs (the completion time ).

Choice relates to period from 1 July 2013 to 1 July 2017

(4) The third condition is satisfied if the completion time occurs during the period beginning on 1 July 2013 and ending on 1 July 2017.

Subdivision 311-C - Consequences of choosing to transfer losses

Table of sections

311-15 Who losses can be transferred to

311-20 Losses that can be transferred

311-25 Effect of transferring a net capital loss

311-30 Effect of transferring a tax loss

311-35 Realisation of certain assets after completion time

311-15 Who losses can be transferred to

The transferring entity can choose to transfer any or all of the transferring entity's losses set out in section 311-20, in whole or in part, to one or more of the following entities (a receiving entity ):

(a) the continuing fund for the choice;

(b) a *pooled superannuation trust in which units are held by the continuing fund for the choice just after the completion time;

(c) a *life insurance company with which a *complying superannuation/FHSA life insurance policy is held by the continuing fund for the choice just after the completion time.

311-20 Losses that can be transferred

(1) The transferring entity's losses that can be transferred are:

(a) any of its *net capital losses for income years earlier than the income year that includes the completion time (the transfer year ), to the extent that they were not *utilised before the completion time; and

(b) any net capital loss it would have made for the transfer year were the transfer year to have ended at the completion time; and

(c) any of its *tax losses for income years earlier than the transfer year, to the extent that they were not utilised before the completion time; and

(d) any tax loss it would have incurred for the transfer year were the transfer year to have ended at the completion time;

worked out subject to the modifications set out in this section.

Note: If the entity choosing to transfer losses also chooses an asset roll-over for the same arrangement, none of the CGT events for the roll-over will contribute towards a loss transferred under this Subdivision (see section 311-45 and subsections 311-50(1) and 311-55(1)).

Modifications for transferred losses

(2) For a choice under Subdivision 311-B by an entity that is a trustee of a *complying superannuation fund, work out those losses by only considering *capital gains, *capital losses, assessable income and deductions to the extent that they are reasonably attributable to the *accrued default amount of the member.

(3) For a choice under Subdivision 311-B by an entity that is a *life insurance company, work out those losses by only considering the following to the extent that they are reasonably attributable to the *accrued default amount of the member, and to a *complying superannuation/FHSA life insurance policy issued by the transferring entity and held by the original fund:

(a) *capital gains from *complying superannuation/FHSA assets;

(b) *capital losses from complying superannuation/FHSA assets;

(c) assessable income covered by subsection 320-137(2) (about complying superannuation/FHSA assets);

(d) deductions covered by subsection 320-137(4) (about complying superannuation/FHSA assets).

(4) For a choice under Subdivision 311-B by an entity that is a trustee of a *pooled superannuation trust, work out those losses by only considering *capital gains, *capital losses, assessable income and deductions to the extent that they are reasonably attributable:

(a) to the *accrued default amount of the member; and

(b) to units in the transferring entity held by the original fund.

311-25 Effect of transferring a net capital loss

To the extent that a loss of a kind referred to in paragraph 311-20(1)(a) or (b) is transferred to a receiving entity:

(a) if the loss is for an income year earlier than the transfer year - the transferring entity is taken not to have made the loss for that earlier income year; and

(b) if the loss is for the transfer year - the following is reduced by an amount equal to the transferred amount:

(i) if the transferring entity is a *life insurance company - the sum of the transferring entity's *capital losses from *complying superannuation/FHSA assets for the transfer year;

(ii) otherwise - the sum of the transferring entity's capital losses for the transfer year; and

(c) if the receiving entity is a life insurance company - an amount equal to the transferred amount is taken to be a capital loss from complying superannuation/FHSA assets made by the receiving entity on the day of the completion time; and

(d) if the receiving entity is not a life insurance company - an amount equal to the transferred amount is taken to be a capital loss made by the receiving entity on the day of the completion time.

311-30 Effect of transferring a tax loss

To the extent that a loss of a kind referred to in paragraph 311-20(1)(c) or (d) is transferred to a receiving entity:

(a) if the loss is for an income year earlier than the transfer year - the transferring entity is taken not to have made the loss for that earlier income year; and

(b) if the loss is for the transfer year - the following is reduced by an amount equal to the transferred amount:

(i) if the transferring entity is a *life insurance company - the sum of the transferring entity's deductions covered by subsection 320-137(4) (about complying superannuation/FHSA assets) for the transfer year;

(ii) otherwise - the sum of the transferring entity's deductions for the transfer year; and

(c) for the purposes of sections 36-15 and 36-17, an amount equal to the transferred amount is taken to be:

(i) if the receiving entity is a life insurance company - a *tax loss of the *complying superannuation/FHSA class that the receiving entity incurred for the income year of the receiving entity immediately prior to the income year in which the completion time occurs; or

(ii) otherwise - a tax loss that the receiving entity incurred for the income year of the receiving entity immediately prior to the income year in which the completion time occurs; and

(d) for all other purposes of this Act, an amount equal to the transferred amount is taken to be:

(i) if the receiving entity is a life insurance company - a tax loss of the *complying superannuation/FHSA class that the receiving entity incurred on the day of the completion time; or

(ii) otherwise - a tax loss that the receiving entity incurred on the day of the completion time.

311-35 Realisation of certain assets after completion time

(1) In working out the *net capital loss referred to in paragraph 311-20(1)(b), or the sum of the transferring entity's *capital losses referred to in paragraph 311-25(b), treat any amount:

(a) that is a *capital loss or *capital gain that the transferring entity makes after the completion time; and

(b) that arises as a result of realisation of assets for the purpose of enabling payment to the receiving entity in connection with the transfer of the *accrued default amount of the member;

as if the loss or gain were made during the transfer year but before the completion time.

(2) In working out the *tax loss referred to in paragraph 311-20(1)(d), or the sum of the transferring entity's deductions referred to in paragraph 311-30(b), treat any amount:

(a) that is an amount of a deduction for the transferring entity, or an amount of assessable income by the transferring entity, arising after the completion time; and

(b) that arises as a result of realisation of assets for the purpose of enabling payment to the receiving entity in connection with the transfer of the *accrued default amount of the member;

as if the amount of the deduction, or the amount of income, arose during the transfer year but before the completion time.

Subdivision 311-D - Consequences of choosing asset roll-over

Table of sections

311-40 Assets roll-over

311-45 CGT assets

311-50 Revenue assets

311-55 Further consequences for roll-overs involving life insurance companies

311-40 Assets roll-over

(1) The transferring entity can choose an asset roll-over for an asset in relation to which, under the *arrangement, a *CGT event happens if:

(a) subsection (2) applies to the asset; and

(b) an asset (the received asset ) becomes an asset of one of the following (the receiving entity ) as a result of the event:

(i) the continuing fund for the choice;

(ii) a *pooled superannuation trust in which units are held by the continuing fund for the choice just after the completion time;

(iii) a *life insurance company with which a *complying superannuation/FHSA life insurance policy is held by the continuing fund for the choice just after the completion time.

(2) The asset is an asset to which this subsection applies (an original asset ) if:

(a) in a case where the entity choosing under Subdivision 311-B is a trustee of a *complying superannuation fund - the asset is reasonably attributable to the *accrued default amount of the member; or

(b) in a case where the entity choosing under Subdivision 311-B is a *life insurance company - the asset is reasonably attributable to:

(i) the accrued default amount of the member; and

(ii) a *complying superannuation/FHSA life insurance policy issued by the transferring entity and held by the original fund; or

(c) in a case where the entity choosing under Subdivision 311-B is a trustee of a *pooled superannuation trust - the asset is reasonably attributable to:

(i) the accrued default amount of the member; and

(ii) units in a pooled superannuation trust issued by the transferring entity and held by the original fund.

311-45 CGT assets

If the roll-over is chosen:

(a) disregard any *capital gain or *capital loss the transferring entity makes from transferring an original asset to the receiving entity; and

(b) the first element of the received asset's *cost base, in the hands of the receiving entity, is the transferring entity's cost base just before the time of the *CGT event; and

(c) the first element of the received asset's *reduced cost base, in the hands of the receiving entity is worked out similarly.

311-50 Revenue assets

Consequences for transferring entity

(1) For each of the original assets that are *revenue assets, the transferring entity's gross proceeds for the relevant *CGT event are taken, for the purposes of this Act, to be the amount (the deemed proceeds ) the transferring entity would need to have received in order to have a nil profit and nil loss for the event.

Consequences for receiving entity

(2) For each of the received assets that are *revenue assets, the receiving entity is taken, for the purposes of this Act, to have incurred an amount for that asset at the time of the *CGT event that is equal to the deemed proceeds for the corresponding original asset.

311-55 Further consequences for roll-overs involving life insurance companies

(1) Section 320-200 does not apply for a *CGT event for the roll-over if either the transferring entity or the receiving entity is a *life insurance company.

Note: Section 320 is about the consequences of transferring assets to or from a complying superannuation/FHSA asset pool.

(2) If the receiving entity for the roll-over is a *life insurance company, each received asset of that entity is taken:

(a) to be a *complying superannuation/FHSA asset of that entity; and

(b) not to be, in whole or in part, a *life insurance premium.

Subdivision 311-E - Choices

Table of sections

311-60 Choices

311-60 Choices

(1) A choice under this Division must be made:

(a) by the day the transferring entity's *income tax return is lodged for the transfer year for the entity; or

(b) within a further time allowed by the Commissioner.

(2) The way the transferring entity's *income tax return is prepared is sufficient evidence of the making of the choice.