Tax penalty to invest with fund managers removed
Industry bodies representing funds management businesses and global hedge funds have welcomed the Federal Government's move to remove tax impediments for non-residents investing in Australian financial instruments.
The Financial Services Council (FSC) said the revised Investment Manager Regime (IMR) draft legislation will give foreign investors clarity on the tax treatment of their investments.
"Less than five per cent of Australia's $2.4 trillion in funds under management are currently sourced from overseas. There is much to win," FSC CEO Sally Loane said.
Under the new law, there will be no income tax consequences that come from portfolio and passive investment gains and losses into Australia from pooling these investments in a widely-held foreign fund.
Also foreign entities that deal with independent Australian fund managers can also disregard income tax consequences from gains and losses from investments to the extent that the returns or gains are not attributable to Australian real property.
The Asia Region Funds Passport, which will offer a regulatory framework for mutual recognition of fund operators and investment funds between countries, will gain from the reforms, the FSC said.
The Alternative Investment Management Association (AIMA) said the change, saying it could increase Australia's capabilities as a hedge fund centre in the Asia-Pacific.
"AIMA has worked closely with Treasury over the last four years to bring local and global intelligence to the IMR policy discussion and we are very pleased to see that many of our recommendations have been incorporated," AIMA Australia chairman Paul Chadwick said.
But AIMA remains concerned that certain sections of the IMR legislation could punish smaller funds, and those who are about to grow their investor base.
The government is calling for submissions for the IMR exposure draft until 9 April.
AUTHOR
Malavika Santhebennur
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