The Gillard Government has reaffirmed its commitment to the Investment Manager Regime (IMR) by announcing amendments to improve the regime’s operation and confirming the intention to introduce the final element of the IMR into Parliament in the first half of 2013.
The Minister for Financial Services and Superannuation Bill Shorten said the IMR remained a cornerstone of the Government’s efforts to strengthen Australia’s credentials as a global heavyweight in financial services.
In creating the IMR the Government has clarified the tax framework so that it supports greater internationalisation of Australia’s funds management industry. Greater utilisation of Australian fund managers by offshore investors creates high skill, high wage jobs and further strengthens Australia’s vibrant, world leading, financial services sector.
“Upon the introduction of the IMR in June 2012 we committed to consult with funds management industry on the types of funds that could access the regime. This recognised that foreign managed funds use various types of entities and complex structures,” Mr Shorten said.
“Following careful consultation with industry, the Government will make legislative amendments to allow funds to trace through to underlying investors for the purposes of applying the widely held and concentration tests.”
The widely held and concentration tests are important integrity provisions of the IMR legislation. As part of the current integrity provisions, funds must have a minimum of 25 members. However, as drafted they inappropriately exclude from IMR Elements 1 & 2 some funds which use common structures such as “feeder funds” that have large numbers of underlying members. The changes mean that when so-called ‘feeder funds’ invest in Australia the number of underlying investors in the fund will count towards meeting the requirements to qualify.
Element 1 provides certainty for funds that may be impacted by the application of US accounting rules to managed funds, commonly known as ‘FIN48’, by excluding income from certain entitlements of a foreign fund where the fund has not lodged a tax return for the 2010-11 and prior income years.
“The Government will continue to consult extensively with industry as it moves to finalise the final element of the IMR,” Mr Shorten said.
“Once enacted in full, the IMR regime will be further evidence of the Gillard Government’s persistent efforts to promote Australia as a regional financial services centre.”
Minister Shorten’s media contact: Jessica Lindell 0408 642 804