The Gillard Government is promoting Australia's fund managers and financial expertise to overseas investors, today releasing draft legislation that will bring Australia's investment manager regime more closely in line with other financial services centres like the UK, Hong Kong and Singapore.
The amendments to income tax law will clarify how certain income of foreign funds, for 2010-11 and prior income years, are taxed. It will also clarify the treatment of certain investments of foreign funds, where the returns or gains are treated as being attributable to a permanent establishment in Australia.
The Assistant Treasurer and Minister for Financial Services, Bill Shorten, said "The proposed changes in tax treatment provide certainty for businesses investing through Australian intermediaries."
"Australia's taxation of foreign managed funds is not consistent with other financial centres, including the US, the UK, Hong Kong and Singapore. These new measures will help Australia retain $57 billion already invested here by foreign managed funds."
"The proposed amendments will support Australia's managed funds industry, which stood at around $1.8 trillion at the end of March 2011."
"The draft legislation is a further step in the Gillard Government's commitment to position Australia as a leading financial services centre," the Assistant Treasurer said.
"It responds to a recommendation by the report of the Australian Financial Centre Forum concerning the tax treatment of funds management vehicles."
As part of the 2011/12 Budget, the government asked the Board of Taxation to bring forward its review of the full funds management Investment Management Regime. The Board of Taxation will now report to the Government by 30 September 2011 in relation to this issue.
The exposure draft legislation and explanatory memorandum is available on the Treasury website. Consultation closes 30 August 2011.