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Superannuation - Account Consolidation issues

If you consolidate superannuation accounts as so called expert advisers and the government recommend , you will be immediately liable to pay capital gains tax (CGT) on the lifetime gains of your account. This happened to me this year with IOOF. My full balance did not rollover to my MLC account. The ATO and and other expert advisers say consolidating super is “tax free”, but I have discovered this is bad advice and very misleading. They don’t really know what they are talking about. It actually means you are not liable for income tax. IOOF slugged me for CGT when I consolidated accounts to MLC this year. You don’t actually get it as income anyway, its a rollover. So, is it a smart move to consolidate accounts if your tax liability is thousands of dollars because this could equate to tens of thousands in lost investment over time.

I did talk to the ATO on several different occasions but their advice was conflicting, it depends on who you talk to. The ATO website also says consolidating super accounts is “tax free”. No mention anywhere on the CGT tax liability.


Welcome to the community @AB1959

I understand your pain. I needed some authoritative advice from the ATO for what I thought would be a routine question. I was passed along and the 5th and last person was The Specialist. I asked for an email to confirm the advice; her reply was if I wanted it in writing I needed to ask for a formal determination.

My observation is thus that most ATO staff who are non-specialists to a question don’t know, and no ATO staff wants to take responsibility in case they are wrong. A determination seems to involve specialists as well as lawyers in collaboration.

We pay pollies ridiculous amounts for making tax legislation even the ATO staff cannot understand.

I found a somewhat dated article from 2011 that may be germane

and this from the current Canstar page

## Capital gains tax differences in superannuation

As outlined by the ATO, the tax treatment of a super fund depends on whether an account is in accumulation phase or pension phase. The accumulation phase is what you will be in for the majority of your life, while you are working and contributing to your super. The pension phase usually starts when you retire and draw an income from your account.

According to the ATO, during the accumulation phase your super fund will typically receive a discount of one third, or 33%, on any capital gain made on the sale of an asset it holds for at least 12 months. Because the ATO notes the tax rate for super funds is generally a flat 15%, the discount means the super fund will effectively pay a tax rate of 10% on the gain. While the ATO points out that an individual can potentially apply a 50% discount to capital gains where an asset is owned for at least 12 months, because most people have a higher marginal tax rate than the 15% super fund rate, you could end up paying more capital gains tax if you owned the asset yourself compared to within a super fund.

For information about capital gains tax and SMSFs, read our overview.(

I doubt many know about this, and it is probably even more complex and convoluted than it appears, requiring a super tax specialist who might understand it.

I am still searching for something about non-SMSF transfers.
edit: found this if it reflects current law

Thanks for posting!


That last pdf was in regards to when two funds merge, not the rollover of funds by a participant from one fund to another. In the pdf it discusses that losses can be carried over which would not happen in a rollover.

CGT as discussed above that pdf relates to the fund again ie if the fund sells an asset then the fund gets a discount on the CGT otherwise payable, this is not CGT on a participant’s account holdings but instead on the funds asset holdings ie it would affect the fund’s earnings for that Tax period.

In regards to taking CGT from a Rollover this would seem contrary to the law as it currently stands and @AB1959 might be better off making a complaint to AFCA re the charging of CGT on a rollover. IOOF would need to explain why they took CGT out. If the superannuant’s money was in pension phase this might make a difference but the only way to get certainty is to formally ask for a review by AFCA.


It might so @AB1959 should clarify that for us.

To be honest, I’ve never heard of having to pay tax when rolling over but it has been quite a while since I did that, and the super system is so complex anyway that it could only have been designed by a politician.


Thanks for catching that.

A good point is that @AB1959 should ask for an receive an explanation in writing, and if he does not understand and accept it is a lawful action then go through a formal complaints process with IOOF and then to AFCA.

We are not licensed to offer advice, and opinion is only that :wink:


When I originally called the ATO I spoke to their Superannuation specialist and she said she has never heard of any tax being deducted from a superannuation consolidation.

I did lodge a formal complaint with AFCA several weeks ago on advice from the ATO Superannuation department. I received a reply today from IOOF denying they have done anything wrong. AFCA replied to me shortly afterwards saying they have now referred my complaint to a case worker.


My super is in regular accumulation phase. 62 and not retired yet. Lost so much since current global events. Many others in my situation and just want them to know to be careful.


If it helps,
I consolidated several super accounts into my Industry Super in 2015. The process was straight forward and managed by my Industry fund. There was no need for me to contact the other funds. The paperwork I completed I returned to the Industry fund. No talk or issues with CGT. I checked the balances before and after. The funds I was leaving sent confirmation letters before and after, while my Industry fund provided a written confirmation for each transfer completed.

The situation @AB1959 describes seems unusual.
Incidentally IOOF was one of the fund managers I transferred from.


I always thought we paid pollies ridiculous amounts to pay ‘expert advisors and lawyers’ ridiculous amounts to make tax legislation that neither the pollies nor ATO staff understand, forcing everyone to engage ‘expert advisors and lawyers’ and pay them ridiculous amounts to give non-binding advice on how it might be understood when it finally goes to court for a determination because in the case of tax law one is guilty until proven innocent … and the judge (who almost certainly is paid a ridiculous amount) doesn’t really understand either, s/he engages more ‘expert advisors and lawyers’ who are paid ridiculous amounts. None of the ‘expert advisors or lawyers’ really understand either, everyone just waits for the now ‘well informed judge’ to make a ‘judgement’ that is binding until the next victim of the system who has enough money thinks it is worth appealing the last decision … (rinse, repeat …).

… but I suspect you were summarising the process and maybe I left a few steps out that someone more cynical than myself :innocent: would have included :wink:


I transferred 2 AMP super policies to my CBUS Super account, one with no difficulty, no CGT, no deduction. The second did not transfer for various reasons, I then enlisted CBus, they completed the process with no CGT or fee deduction. My advice is to leave it to your cosolidated super fund to do the work, they have the knowledge and authority.


I would be asking them in writing why they charged CGT on the consolidation (rollover) of your accounts into one and what was their legal basis for deducting the CGT.


You and everyone else. :frowning:

The answer to the question about CGT taxation when switching super is answered. One has to love the complexity government designed into super taxation when it could have been and still could be made so easy anyone could understand it - but then many financial planners/accountants might be out of work. :expressionless: