Super Fund CGT Relief


The Government has introduced new legislation for SMSFs in late 2016, notably a pension cap balance of $1.6M and removing the tax-exempt status of Transition to Retirement Pensions (TRAPs) accounts. With many SMSF’s currently holding more than $1.6M tax free in pension accounts, these are significant changes for superannuation that will dramatically affect many individual’s current retirement plans.

Once sold, these gains would have originally been tax exempt if the asset was held in a pension or TRAP account. The Capital Gains Tax (“CGT”) relief offers SMSF’s a final chance to realise their accumulated gains and to claim the current tax concessions available to them before the new legislation comes into effect. The relief will ensure that any CGT will be payable only on capital gains accrued from 1 July 2017 onwards.

The relief is performed by notionally selling the asset on 30 June 2017 at its current market value, then immediately buying it back for the same price. This process realises the accrued gains on the asset and resets the cost base back to the market value at the time of “sale” for the start of the next financial year. Eligibility is not guaranteed and an SMSF must satisfy ALL the following criteria to qualify for the relief.

  • The SMSF is complying.
  • At least one member of the SMSF commenced a Pension (i.e. SABP / TRAP) before 1 July 2017.
  • At least one member of the SMSF is affected by the new law (i.e. their pension is a TRAP and / or their pension is an SABP and currently over $1.6M
  • The assets were acquired by the Fund prior to 9 November 2016 and are continued to be held by the Fund until 30 June 2017.
  • The Trustees make a valid election in the approved form before the ATO’s lodgement due date of the 2016/2017 Income Tax Return.