Capital gains tax (CGT) relief needs to be revised if more superannuation funds are to merge, according to KPMG partner Sheena Kay.
In 2008, the federal government announced that it would provide an optional CGT rollover for capital losses arising from CGT events that occurred under complying fund mergers.
"While the relief has been welcomed, there are still a number of technical deficiencies," Kay told the annual Australian Custodial Services Association - Risk and Responsibility Investment Administration conference in Sydney this week.
"The CGT relief only applies to vanilla-type fund structures and to full fund mergers. I know of at least two significant fund mergers that cannot occur because of these factors."
The CGT relief's current end date is 30 June 2011 and Kay said that also had implications for fund mergers.
"This end date means that superannuation funds only have 16 months to get their act together if they are preparing to merge," she said.
"Trustees have to bring forward a huge tax liability and this will be difficult to justify in a merger."
She said tax should not be a driver of fund mergers, but it played an important role in providing incentives to merge.The government's CGT rollover relief is currently being reviewed in the House of Representatives.
