A: It is not compulsory to have the cost base of any of the fund’s investments reset.  The trustees have absolute choice on which assets to have the cost base reset.

Whether all of the investments of the fund can have their CGT cost base reset on any assets depends on whether the fund has its exempt pension income calculated on a segregated or proportional (unsegregated) basis:

Segregated Funds

As for the CGT cost base reset it would also be worthwhile for the trustees to have a minute signed prior to 30 June 2017 which recognises that the value of some fund investments may need to have their CGT cost base reset for those assets being transferred from pension to accumulation phases. However, this cannot be done until the exact value of the investments are known ,usually,  as at 30 June 2017.  When the accounts for the fund are being prepared it may be a good time to select the investments which will require the CGT cost base to be reset.  Technically, the fund has up to the time the fund lodges its tax return to elect to reset the CGT cost base of the relevant investments.

Basically, for a segregated fund it is possible to reset the CGT cost base of the fund’s assets if:

• The asset has been owned by the fund during the period 9 November 2016 until 30 June 2017
• The cost base can only be reset on those assets which are being transferred out of pension phase to either accumulation phase or for pensions that are transition to retirement pensions
• The cost base can be reset on the value of the assets on any date between 9 November 2016 and 30 June 2017
• Resetting of the cost base on the relevant asset is optional
• An election to reset the cost base is irrevocable

If the fund is an unsegregated fund it would also be worthwhile for the trustees to have a minute signed prior to 30 June 2017 which recognises that the value of some fund investments may need to have their CGT cost base reset.  This is not essential.

Unsegregated Funds

 Just like funds that use the segregated method the reset cannot be done until the exact value of the investments are known for a fund that uses the unsegregated method which is also called the proportional method. However, for a fund that uses the unsegregated or proportionate method to work out its tax payable it is possible to reset the CGT cost base on any CGT asset of the fund.

Basically, for an unsegregated fund it is possible to reset the CGT cost base of the fund’s assets if:

• The asset has been owned by the fund during the period 9 November 2016 until 30 June 2017
• The cost base can be reset on any asset held by the fund during the period 9 November 2016 until 30 June 2017
• The cost base must be reset on the value of the asset as at 30 June 2017
• Resetting of the cost base on the relevant asset is optional
• An election to reset the cost base is irrevocable

To reset the values it will be necessary to obtain an unrealised capital gains tax report on the fund as at 30 June 2017 in the case of an unsegregated fund or the value of the particular investment at the time the trustees wish to reset the cost base in the case of a segregated fund.  Once the investments that will have their CGT cost base reset have been chosen by the trustee, the accounts for the 2016/17 financial year will be adjusted to reflect the adjusted cost base.  The income tax return will include an election from the trustee concerning the investment that has its cost base reset.  The election is irrevocable and is required to be lodged with the fund’s 2016/17 income tax return.