Issue
Will the exception in paragraph 104-60(5)(b) of the Income Tax Assessment Act 1997 (ITAA 1997) apply to the transfer of assets from one superannuation fund to another superannuation fund?
Decision
Yes. The beneficiaries and terms of both superannuation funds are the same.
Therefore, the exception in paragraph 104-60(5)(b) of the ITAA 1997 will apply.
Facts
The assets of one superannuation fund will be transferred to another superannuation fund. The transferor fund will not receive any consideration for the transfer.
Both funds are complying superannuation funds.
Both funds have the same beneficiaries. That is, they have the same members and pensioners.
The trust deeds for both funds are identical. Both contain clauses permitting the transfer of assets.
The investment strategies for both funds are the same.
Reasons for Decision
CGT event E2 happens when a CGT asset is transferred to an existing trust (subsection 104-60(1) of the ITAA 1997). The event happens when the asset is transferred (subsection 104-60(2)). As one trust (superannuation fund) will transfer an asset to another trust (superannuation fund) CGT event E2 will happen unless the exception in paragraph 104-60(5)(b) applies.
The exception in paragraph 104-60(5)(b) of the ITAA 1997 applies if an asset is transferred to a trust from another trust and the beneficiaries and terms of both trusts are the same.
In this case, the beneficiaries and terms of both superannuation funds are the same. The members and pensioners of both funds are the same and their trust deeds are identical.
Accordingly, the exception in paragraph 104-60(5)(b) of the ITAA 1997 will apply to the proposed transfer of assets between the funds.