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Tax recommendations

Even though taxation was excluded from the Cooper Review’s terms of reference, the Cooper Review has made a number of recommendations covering taxation in a broader context. This is because the Panel believes that the super industry is not giving adequate priority to taxation. The Panel believes that all players in the super industry, (e.g. fund managers, trustee-directors and so on) must adopt an ‘after-tax mindset’ about investment return disclosures, investment decision making and portfolio management.

Specifically, the main taxation comments included in the Cooper report are:

  • Taxation consequences should be considered when developing and implementing investment strategies (see Chapter 3)
  • Investments should be managed based on after‐tax returns (see Chapter 3)
  • Costs should be reported consistently on a pre-tax basis but investment returns should be calculated both on gross and net of all costs and taxes (see Chapter 4)
  • Net investment returns are a function of gross returns, less fees and taxes. A separate investment strategy for post-retirement MySuper members should be required which takes into consideration taxation. Recommendations made by the Henry Review should also be considered (see Chapter 7)
  • All funds (including SMSFs) benefit from the tax concessions that are designed to encourage and help members to save for retirement. The same taxation legislation should apply across all sectors (see Chapter 8)
  • CGT should not be a barrier to fund mergers and successor fund transfers, and permanent CGT rollover relief should be provided to funds (see Chapter 9).

 

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