ATO releases draft guidance on super reforms

Friday 25 November 2016

The Australian Taxation Office (ATO) has published two draft Guidelines relating to the new limit on the amount that can be used to commence a superannuation income stream (known as the transfer balance cap) from 1 July 2017. Legislation to implement the transfer balance cap has recently been passed by both Houses of Parliament.

One of the draft Guidelines (LCG 2016/D8) provides guidance on the transitional capital gain tax (CGT) relief that is available to superannuation funds that need to move assets to prepare for the transfer balance cap or the changes to the tax treatment of transition to retirement income streams. The CGT relief available for funds where assets supporting income streams are reallocated or reapportioned to accumulation phase before 1 July 2017. The Guideline includes information on how a fund makes the choice to apply the relief, the operation of the relief for both segregated and unsegregated funds and the effect of resetting an asset’s cost base. It also includes a reminder that the general anti-avoidance provisions may apply to funds entering into schemes to make the election and obtain the resulting tax benefit.

The second draft Guideline (LCG 2016/D9) includes information on how the transfer balance cap operates for account based income stream products. It provides specific guidance on new concepts that are being introduced as a result of the reforms, such as the transfer balance account, general transfer balance cap and the personal transfer balance cap. It also covers credits and debits to an individual’s transfer balance account and the consequences of exceeding the transfer balance cap.

Comments on the draft Guidelines are due by 8 December 2016.

Further information

ATO, Law Companion Guideline LCG 2016/D8 Superannuation reform: transfer balance cap and transition to retirement reforms: transitional CGT relief for superannuation funds

ATO, Law Companion Guideline LCG 2016/D9 Superannuation reform: transfer balance cap

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