The law firm highlighted several significant reforms from the Australian Financial Centre Forum's 2009 report, Australia as a financial centre: Building on our strengths (the 'Johnson Report') that are yet to be fully implemented.
“Some of these reforms concern issues which are fundamental to an efficient financial services system – including whether a trust is a fixed trust so that franking credits may 'flow through' the trust to the ultimate investors and whether certain custodial arrangements are indeed relevant trusts for these purposes,” the submission stated.
Particular recommendations that Minter Ellison called on the Government to introduce include:
• a broader range of 'tax transparent' collective investment vehicles;
• removal of withholding tax on:
-interest paid on foreign raised funding by Australian banks;
-interest paid to foreign banks by Australian branches; and
-financial institutions' related party borrowing
• removal of LIBOR cap on deductibility of interest paid on branch parent funding;
• ensuring Islamic finance products have parity of treatment with conventional products;
• removal of all state taxes and levies on the insurance sector.
According to Minter Ellison, the Johnson Report identified that tax uncertainties and the scope of the Australian tax system acted as a significant restraint on cross-border business and were an impediment to Australia's recognition as a regional financial services centre.
In its submission, the law firm wrote: ‘the extent to which tax uncertainty, taxation reform and the incomplete implementation of such reforms remains an impediment should be further investigated and considered by the Inquiry”.
Minter Ellison also called on the extension of the tax incentives available to superannuation funds to increase market demand for, and to incentivise the development of, innovative retirement income stream products.