The merger of the Stevedoring Employees Retirement Fund and the Seafarers Retirement Fund has been delayed by several months, after the losses of September and October created large tax credits that would be lost if the merger went ahead on January 1 as planned.
Under current tax laws, superannuation funds must crystallise their capital gains and losses when they merge. On two previous occasions, during the introduction of SIS legislation and RSE licensing, the industry successfully sought exemption from these laws. The Association of Superannuation Funds of Australia (ASFA) has argued that the global financial crisis is a similarly exceptional circumstance, and has been lobbying the Treasury for temporary exemption on behalf of several funds in the process of a merger.
Pauline Vamos, chief executive of ASFA, said there were close to 10 funds affected by the laws. “We would like to see funds receive permanent relief, but we think that at least an exemption is appropriate during these times,” she said.
While reluctant to specify the size of the tax credits, chief executive at the Seafarers fund, Glenn Davis, said they would be comparable with other industry funds who had suffered similar losses. “They are significant,” he said. “We have decided we need to delay the merger until it is clear whether there will be tax relief in the legislation."
Davis said the funds had not envisaged that markets would turn this severely when January 1 was chosen as the date to officially form Maritime Super back in May this year.