Tax reform boosts financial services outlook
Australia's financial services industry will benefit from the Tax Laws Amendment (Investment Manager Regime) Bill 2012 which was today passed by Parliament.
The Investment Manager Regime removes the tax uncertainty that has been a barrier to the use of Australian fund managers by international investors. It is the signature recommendation of the Johnson report commissioned by the Government to look at reforms that would enable the financial services sector to take full advantage of opportunities in the region.
"This will make Australia more attractive as a destination for investment and encourage employment in the financial services sector," the Minister for Financial Services and Superannuation, Bill Shorten said.
This legislation constitutes the first two elements of the Investment Manager Regime (IMR), which are designed to:
- address the impact of the application of US accounting rules - widely referred to as 'FIN 48' -on managed funds which invested in or through Australia in the 2010-11 and earlier income years;
- exclude from Australian tax, for 2010-11 and later income years, certain income of widely held foreign funds that is taxable only because the fund uses an Australian based agent, manager or service provider; and
- remove uncertainty as to the tax treatment of 'conduit income' of managed funds as recommended by the Henry review.
"Australia has one of the most efficient and competitive financial sectors in the Asia-Pacific region. These measures will remove impediments to Australia expanding our exports and imports of financial services," Mr Shorten said.
These amendments will remove the potential for uncertainty regarding the Australian tax treatment of certain foreign fund income and will allow foreign investors to move forward in their arrangements with confidence of their Australian tax position relating to earlier years.
It will ensure that the law does not operate to discourage foreign funds from engaging the services of an Australian financial intermediary.
"I would like to thank the various organisations, like the Financial Services Council and a number of leading legal and accounting firms, who have contributed to the extensive consultation process on the measures in the bill," Mr Shorten said.
"Consultation with industry has highlighted that it is not possible at this stage to define in legislation all of the different investment entity structures operating in eligible offshore jurisdictions."
Where entities satisfy the policy intent of the measures in this legislation, the government will use the regulation-making power provided in the legislation to ensure that they benefit from the IMR.
"The Gillard Government will continue to engage with industry to ensure that the objectives of the legislation are delivered," Mr Shorten said.
The Government remains committed to ensuring Australia's taxation arrangements for passive portfolio investments of managed funds are in line with those of other major financial centres such as the United States, the United Kingdom, Hong Kong and Singapore.
These measures will support Australia's world-class funds management industry and are in line with the government's objective to secure Australia's position as a thriving and robust financial services centre.
23 August 2012