The ATO is allowing super fund members in pension phase the ability to reset the cost base of fund assets. This may reduce the potential future tax impact for members with balances over $1.6m.
If you were receiving a superannuation income stream (such as an account based pension or a transition to retirement income stream) at 30 June 2017 and have a member balance over $1.6m you may have future tax implications when you dispose of assets that you otherwise would have been exempt from under the old rules.
The ATO has recognised this and is allowing a one-off opportunity to reset the cost base of selected assets within your super fund. If CGT Relief is applied the trustees reset the cost base of selected assets purchased before 9 November 2016 to its market value as at 30 June 2017. Slightly different rules apply if your fund was segregated but essentially this allows accumulated capital gains to be disregarded. This will ensure that when these assets are sold after 1 July 2017, tax is only paid on capital gains accrued after this date.
Keep in mind you are not required to apply CGT Relief. For example you most likely will not look to reset the cost base to the market value of assets in a loss position. You must also take into consideration that any assets that have applied CGT relief are sold within 12 months of the reset then the discount does not apply to the capital gain (33% for super funds).
This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.
In order to apply CGT relief you will need to prepare the required documentation and notify the ATO before the lodgement due date of your 2017 super fund return. To discuss this further please don’t hesitate to contact us on 1300 039 190 so we can review your investment position.