Involuntary rollover of superannuation benefits – new law

On 19 March 2015 the Tax and Superannuation Laws Amendment (2014 Measure No. 7) Act 2015 received Royal Assent. The Act contains in Schedule 4 the changes of the law in relation to involuntary roll-over superannuation benefits and applies from 1 July 2015.

The law alterations were introduced to ensure that superannuation fund members, depositors with an approved deposit fund and holders of a retirement savings account are not disadvantaged where the benefits are rolled over between plans in response to the Stronger Super package of super reforms or where a successor fund transfer occurs.

The alterations also offer greater confidence for super funds that are considering entering into super fund mergers.

The law amendments provide:

  • A definition of an involuntary roll-over superannuation benefit and an updated definition of successor fund.
  • That an individual will remain in the same taxation position if their superannuation interest is involuntarily rolled over to another superannuation plan.
  • Where an individual’s superannuation interest was not supporting an income stream, the new plan will recognise the value of the individual’s contribution segment and crystallised segment in the original plan immediately prior to the involuntary transfer.
  • That income stream benefits be paid from the new plan in the same proportion of tax free and taxable components as they were from the original plan.
  • That the original transferring plan is no longer required to give their former members, depositors or account holders a roll-over benefit statement in relation to an involuntary roll-over superannuation benefit.

The ATO has prolonged its current concessional compliance treatment until 1 July 2015 in relation to successor fund transfers.

Peter Gell

Peter was admitted as a solicitor in 1981 and holds qualifications in law and a Masters degree in taxation conferred by the University of NSW. Peter practises in taxation advisory, estate planning and wills, probate and commercial law.