As part of ongoing efforts to increase Australia's attractiveness to foreign investors, the Assistant Treasurer, Bill Shorten, today announced the foreign accumulation fund (FAF) integrity rule will not apply for the 2010-11 income year.
The FAF rule will form part of a wider package of reforms to the foreign source income attribution rules, of which the modernised Controlled Foreign Company (CFC) rules will be the centrepiece.
Significant progress was made in delivering these reforms last year with the repeal of the foreign investment fund (FIF) regime and the deemed present entitlement rules, which received Royal Assent on 14 July 2010.
The Government is in the process of developing the FAF rule and is engaged in ongoing public consultation.
"The FAF rule is still under development and 30 June is fast approaching. The Government has received no evidence that deferral activity has emerged following the repeal of the FIF regime. We are therefore happy to provide certainty for industry and investors by confirming the FAF rule will not apply for the 2010-11 income year. The FAF rule will have application for income years starting on or after the date it receives Royal Assent."
"These reforms reduce cost and complexity for Australia's financial sector as it seeks to compete internationally," Mr Shorten said.