GBST : Australian Productivity Commission Praises Leading Australian Superfunds on Implementing Tax-Aware operations with the help of GBST’s Tax Solutions

13 July 2018

• Australian Productivity Commission highlights superannuation funds are using GBST's solutions to optimise tax management.
• GBST's tax technology solutions help superannuation funds and their investment managers maximise the after-tax returns for their members

The Australian Government's Productivity Commission recently highlighted the benefits delivered to Superannuation Fund members through 'tax aware' investment strategies. Utilising GBST's patented and market leading tax solution technology, funds can manage their tax positions across all portfolios.

Tax is often the single largest cost to superannuation funds, significantly larger than the impact of management and performance fees, which are often the focus when evaluating fund efficiency and value to members. GBST Tax solutions allow superannuation funds to manage and deliver more efficient tax outcomes, resulting in a reduced tax position and improved net returns for their members.

In 2016 the Australian Government asked the Productivity Commission to undertake a review of the competitiveness and efficiency of the Australian superannuation system. The Commission was asked to make recommendations to improve outcomes for superannuation fund members.

The Productivity Commission has since conducted an extensive inquiry into the superannuation system's performance by looking at how individual members are benefiting and how outcomes can be made better for Australians when they retire.

On the issue of tax management, the Commission draft report states:
'There are well documented difficulties in implementing Tax Aware Investment Management (TAIM), however some large funds, including Mercer, Australian Super and UniSuper have made public their use of external consultants to optimise tax management (GBST 2017). This suggests that at least some funds are taking this relatively new obligation seriously, and also that it is not prohibitively difficult to implement'.

While the Commission acknowledges that varied performance as well as problems within the superannuation system can compound over time to add to, or erode, members' retirement balances, GBST Head of Asia Pacific, Denis Orrock said tax leakage as part of the investment process did not need to be one of the problems that superannuation funds had to deal with.

'This is the fundamental driver for GBST investing in the development of the GBST Tax Analyser platform - to help superannuation funds and their investment managers manage tax pro-actively throughout the investment process in a seamless manner.'

'Without the capability provided by our patented tax platform, managing tax holistically through the investment process is difficult to do, ' he said.

GBST's Tax platform was designed with the MySuper legislation front of mind which requires Superannuation Funds to be cognisant of tax leakage not only after the fact but, more importantly, during the investment management process.

The report also stated that the cost of tax inefficiency ranges from five to 200 basis points per year.

'As per the Productivity Commission report, solutions such as the GBST Tax Analyser facilitate the proactive management of tax positions and allow superannuation funds to take positive steps in the optimisation of the fund's overall tax position to deliver members improved performance, resulting in greater returns to members which must be the ultimate goal of any superannuation fund and indeed the entire industry.' Mr Orrock said.

Further information from:

Denis Orrock | Head of Asia Pacific | GBST
D: [phone] | M: [phone] | F: [phone] | www.gbst.com

About GBST

• GBST is a specialist financial technology company which provides administration and transaction processing software for retail wealth management organisations and global and regional investment banks. Founded in 1983, GBST is listed on the Australian Securities Exchange under ASX ticker code GBT.
• In Australia, GBST provides its full range of retail wealth and institutional solutions for the wealth management and capital markets industries. The company's industry-leading software platforms include GBST Composer®, which provides end-to-end funds administration and management software for the wealth management industry; GBST Syn∽®, which provides a new generation post-trade processing platform for equities, derivatives, fixed income and managed fund processing; and GBST Shares, which is the most widely-used back- and middle-office processing equities software in Australia
• In the rest of the world, the GBST Syn∽® platform supports institutional capital markets, primarily in Asia and North America.