A revised draft of the Investment Manager Regime legislation has been released, following stakeholder feedback on the initial proposals designed to alleviate perceived tax disincentives on foreign managed funds investing in Australia.
The Government is calling for industry submissions on the draft, due by April 4 2012.
Announced in three stages, the IMR is intended to encourage greater cross-border investment activity and stimulate the Australian financial services sector by creating certainty in tax rules imposed on investment income, particularly in terms of residency, source and permanent establishment.
The first stage sought to alleviate the impact of "FIN48", a US accounting rule requiring disclosure of uncertain tax positions, which previously resulted in many US-based funds making provisions for potential Australian tax liabilities that caused a decline in net asset values and unit redemption price.
The second issue changes seek to address is the situation where a foreign managed fund is taken to have a permanent establishment in Australia because of its use of an Australian adviser, thereby resulting in income of the fund being subject to Australian tax.
"The revised draft takes into account issues raised by stakeholders with the previous draft and demonstrates the Government's commitment to consultation and to working with industry to implement these important reforms," said Bill Shorten, Minister for Financial Services and Superannuation in a statement issued yesterday.
The Government announced the final element of the IMR on December 16 2011, with legislation and consultation to follow.
"I encourage stakeholders to continue to engage with both the Treasury and with Government and to provide their submissions on this exposure draft within the allotted timeframe," said Minister Shorten.