The introduction of an IMR is a key recommendation of the report by the Australian Financial Centre Forum, Australia as a Financial Centre, Building on our Strengths (the Johnson report). It will make Australia more attractive as a destination for investment and encourage employment in the financial services sector.
“This bill will provide foreign managed funds and their investors with greater certainty as to the tax treatment of certain income of the fund and further the Government’s goal of establishing Australia as a regional financial centre,” Mr Shorten said.
This bill will exclude from Australian tax certain income for the 2010-11 and earlier income years of widely held foreign funds which have not lodged a tax return and have not had an assessment made of their income tax liability.
This bill constitutes the first two elements of the IMR, which are designed to;
- address the impact of the application of US accounting rules – widely referred to as 'FIN 48' -on managed funds investing in or through Australia
- exclude from Australian tax, for 2010-11 and later income years, certain income of widely held foreign funds that is taxable only because the fund uses an Australian based agent, manager or service provider
- remove uncertainty as to the tax treatment of ‘conduit income’ of managed funds as recommended by the Henry review.
The IMR bill was developed after two rounds of exposure draft legislation, including extensive consultation with industry and investors – both domestically and in international financial centres. Following the first exposure draft, the Government was committed to ensuring that the recommendations arising from the Board of Taxation’s report on the IMR were reflected in the legislation.
“This is a complex area of policy and the Government is determined to ensure that the legislation achieves its goal of improving Australia’s standing as a financial services centre through greater certainty and transparency,” Mr Shorten said.
“The bill is a further step in the Gillard Government’s commitment to building Australia as a financial centre. The Government will continue to consult with industry in the development of the third element of the IMR.”
“I call on all members of Parliament to support this legislation.”
