US mutual funds await government decision
Merrill Lynch and Alliance Capital have made a joint submission to senior govern-ment figures regarding a change in the capital gains tax (CGT) status of US mutual funds being offered to Australian investors.
Merrill Lynch and Alliance Capital have made a joint submission to senior govern-ment figures regarding a change in the capital gains tax (CGT) status of US mutual funds being offered to Australian investors.
Under the changes to CGT released late last year, US-based funds would not receive any tax cuts since the share gains are returned as dividends. As such the returns could still be taxed at the full 48.5 per cent rate while local fund returns would be taxed at 24.25 per cent.
According to both groups, this would make their funds unattractive to local investors.
Merrill Lynch Australia chief executive officer John Magowan says he expects to re-ceive notification of any changes within six weeks.
Magowan says the hearings were positive and he is quietly optimistic but says Merrill Lynch also needs to be practical.
“We have not seen the cloud of white smoke, so to speak, but there are procedural is-sues that need to be put on the agenda and worked through,” Magowan says.
This period of uncertainty however has not been a negative one, he says, as investors overseas in Europe and the US, are using the presence of Merrill Lynch in Australia to invest locally.
Magowan says Merrill Lynch is increasingly getting orders from these places to buy into Australia with the release overseas of research the company has done on the local market.
AUTHOR
Jason Spits
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