Last week Sam Hunt wrote to The Editor of The AFR in response to The Hon Kelly O'Dwyer's opinion piece "Phony super war fought by those who profit from the system". The letter was published in The AFR 17 June 2018.
As an outcome, we are pleased to be meeting with The Minister in early August to discuss this and the many other challenges facing the financial services sector.
The Hon Kelly O'Dwyer should be congratulated on the work she is doing to address some of the systemic issues in the current financial services industry. She is right to assert in her opinion piece, that super fund members should have the ability to move from high cost, low performing funds without penalty. However, one issue that the Government has failed to address is the impact of capital gains tax on a member's balance when switching providers.
Under the current rules, if a member wishes to transfer their current portfolio to another provider (assuming the same investments are available), they must pay capital gains tax due to a change in superannuation trustees.
For example, if the member held BHP shares in their super fund and wished to transfer the same shares to another super fund, they are subject to capital gains tax even though the beneficial owner and the shares are exactly the same. In some instances, members are paying thousands of dollars in tax which can far outweigh the benefit of switching from a high cost super fund provider.
If the Government is serious about making it easier for all super fund members to move between retail and industry funds, it needs to address the systemic issue of capital gains tax on in-specie transfers otherwise it too is profiteering on super at the expense of members.
Sam Hunt, Director WARR HUNT