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Monday, 29 October 2012
Page: 12204

Mr HARTSUYKER (Cowper) (12:41): I welcome the opportunity to speak on the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 and the Superannuation Auditor Registration Imposition Bill 2012. The coalition takes the issue of superannuation very seriously. It is vital for the retirement of countless millions of Australians that we have a superannuation industry that can meet the needs of an ageing population. We see investment returns challenged by a range of factors such as the global financial crisis and falling profits for a range of companies, so in recent time superannuation returns have been challenged but it is well known that you cannot look at the issue of superannuation returns over the short term. Superannuation is a lifelong investment, and if we can encourage young people to put more money into super at a young age, we can certainly ensure that Australians in their retirement years will have a much higher standard of living.

Unfortunately it is very difficult to get that message through to young people at the age of 18 or 20 or 25 or whatever—retirement at the age of 65 seems a long way off. I think one of the challenges that we as legislators have, and the industry itself has, is to communicate to young people the benefits of investment in superannuation and the importance of investing at a young age. The dollar that is put in at an early stage in a worker's life yields a much higher return on retirement than dollars put in later in a person's life. The impact of compounding is immense. One of the key issues in ensuring that people have a comfortable retirement is that the dollars be put in as early as possible so that when the person comes to retire their superannuation balance is such that they are able to have the sort of retirement they want and expect.

I turn to the legislation. Schedule 1 to the Superannuation Laws Amendment (Capital Gains Tax Relief and Other Efficiency Measures) Bill 2012 reinstates the temporary loss relief and asset rollover in division 310 of the Income Tax Assessment Act 1997, with the following modifications: firstly, there will be an optimal asset rollover for capital gains and revenue gains; secondly, losses that are transferred to the receiving entity will be treated as having been made in the income year that they were transferred; and, thirdly, self-managed superannuation funds will be excluded.

Point 1.2 states:

The loss relief and asset-roll-over removes income tax impediments to mergers between complying superannuation funds by permitting the roll-over of both revenue gains or losses and capital gains or losses. This loss relief will be available for complying superannuation funds (other than self-managed … funds) and approved deposits funds … that merge with a complying superannuation fund with five or more members.

Point 1.3 states:

All references in this chapter are to the ITAA 1997 unless otherwise specified.

The context of these amendments is very important, because the capital gains tax is the primary code for calculating capital gains or losses of complying superannuation funds. There are certain gains and losses that are treated on the revenue account, such as those from a debenture stock or bond with regard to the relevant section here, which is section 295-85. The explanatory memorandum also notes:

The transfer of assets from one superannuation fund to another, under a merger between the two funds, will typically trigger CGT event A1 (about disposals of a CGT asset—section 104-10 of the ITAA 1997) or may trigger CGT event E2 (about transferring a CGT asset to a trust—section 104-60 of the ITAA 1997). Therefore, the asset transfer will lead to the realisation of capital gains and/or capital losses for the transferring fund. Following this asset transfer and the transfer of members’ accounts to the receiving fund, the transferring fund will typically be wound up.

I note that the member for Throsby is in the chamber and is very keen to contribute in this debate. I would say that I reaffirm the coalition's belief that superannuation is a very important vehicle that should be supported. I note the fact that the coalition proposes some amendments to this legislation, and I certainly look forward to further contributions from members in this House in the ongoing debate.