The principle tax deterrent is the timing disadvantage to superannuation funds of any significant investment in infrastructure potentially being subject to the Public Trading Trust rules. For the purposes of these provisions, superannuation entities are treated in the same way as exempt entities.
These provisions date back to a time before superannuation entities were subject to income tax. The effect of these provisions leads to the set up of costly structures to ensure that any potential timing differences are minimised to the extent allowed by law.
The legislative change to these provisions was announced by the previous government to apply from 1 July 2014. However, this was caught up in the re-write of Division 6C, which was deferred. It is not clear whether the current government will proceed to remove this tax deterrent. It would be encouraging for investment by superannuation funds if the government provided certainty on this as soon as possible.
Superannuation funds also need to ensure that they do not fall foul of the non-arm’s length income tests in Division 295 (the so-called 'special income' rules) to ensure that they maintain their concessionary tax rate.