The Federal Government has introduced legislation before parliament that will amend the income tax law which contain the first two elements of the Investment Manager Regime (IMR).

 

The legislation is a key recommendation of the Australian Financial Centre Forum, Australia as a Financial Centre, Building on our Strengths report aiming at making Australia a more attractive destination for investment while encouraging further employment in the financial services sector.

 

"This bill will provide foreign managed funds and their investors with greater certainty as to the tax treatment of certain income of the fund and further the Government's goal of establishing Australia as a regional financial centre," Minister for Financial Services Bill Shorten said.

 

This bill will exclude from Australian tax certain income for the 2010-11 and earlier income years of widely held foreign funds which have not lodged a tax return and have not had an assessment made of their income tax liability.

 

This bill constitutes the first two elements of the IMR, which are designed to;

  • address the impact of the application of US accounting rules - widely referred to as 'FIN 48' -on managed funds investing in or through Australia
  • 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
  • remove uncertainty as to the tax treatment of 'conduit income' of managed funds as recommended by the Henry review.

 

The IMR bill was developed after two rounds of exposure draft legislation, including extensive consultation with industry and investors - both domestically and in international financial centres.

 

"This is a complex area of policy and the Government is determined to ensure that the legislation achieves its goal of improving Australia's standing as a financial services centre through greater certainty and transparency," Mr Shorten said.

 

"The bill is a further step in the Gillard Government's commitment to building Australia as a financial centre. The Government will continue to consult with industry in the development of the third element of the IMR."