Yesterday, the government announced amendments to the Investment Manager Regime and the new tax system for managed investment trusts.
“The Turnbull government is committed to ensuring our policy settings promote Australia as a regional financial centre and to improving the ability of the financial sector to grow and export their services,” a statement from Minister for Revenue and Financial Services, Kelly O’Dwyer, read.
“Industry has identified, however, some technical issues with the practical operation of the Investment Manager Regime (IMR) and the new tax system for managed investment trusts (MITs).”
In response to these concerns the government made multiple amendments, most of which are technical in nature and seek to clarify current industry practice.
EY’s Oceania wealth and asset management leader Antoinette Elias told Accountants Daily that the IMR announcement will assist the external auditors of foreign funds in determining whether a tax provision is required or not.
“The IMR changes provide certainty regarding the ability for a foreign fund to access the rules, by ensuring the basic threshold requirement regarding tax residency is addressed,” she said.
“The government should be applauded for acting quickly on a fundamental issue that could otherwise have undermined the effectiveness of the IMR Concessions.”
Ms Elias said that accountants need to ensure they are across the amendments and work with the clients to ensure they are compliant with the regime.
“The IMR announcement refers to funds that are legitimately established and controlled offshore. Therefore accountants should work with their clients to ensure the offshore fund meets these requirements.”
“Where a fund meets these requirements, it can appoint an Australian independent fund manager and have confidence that such an appointment will not result in the offshore fund being treated as resident of Australia for tax purposes.”
Meanwhile, the nine changes announced in relation to the MIT/AMIT rules predominately clarify the operation of the rules, according to Ms Elias.
“At the time the AMIT Rules were legislated, there were a number of known issues that needed to be addressed. The announcement goes a long way to addressing these issues,” she said.
“The government should be applauded for acting on these critical issues ahead of the previously promised review of the AMIT rules in 2018.”
Ms Elias said that these changes provide greater certainty for accountants when advising clients.
“Accountants need to ensure they understand the changes that have been announced and can now take these issues into account when advising their clients on whether they should enter the AMIT regime and what the advantages and disadvantages of entering the AMIT regime are,” she said.
“The changes announced should be taken into account when undertaking this analysis. The announcements will also ensure that certain entities previously precluded from entering the regime can now meet the requirements to enter the AMIT regime.”