The Australian funds management industry will be on level-pegging tax-wise with New Zealand under Australian Treasury proposals published last week.
Currently, offshore investors – either through a widely-held foreign-domiciled fund or a locally-based fund – may be subject to Australian tax.
However, under part three of the Investment Management Regime (IMR) proposals – due to take effect in the 2015/16 Australian tax year – foreign investors in Australian portfolio vehicles would be granted tax exemption from “certain gains and losses” for the first time.
“These changes are expected to encourage greater foreign investment to Australia and allow Australian fund managers to actively market their financial services globally, thereby promoting Australia as a regional financial services centre,” the Australian Treasury document says.
According to the Treasury proposal, the foreign investor tax exemption rules “are based on the requirements in the
United Kingdom’s (UK) Investment Manager Exemption (IME)”.
New Zealand introduced similar exemptions for foreign investors under ‘zero-rated PIE (portfolio investment entity)’ regulations in 2011.