The Government Thur 4.4.2013, released exposure draft legislation and explanatory materials which propose to implement the third and final element of the Investment Manager Regime (IMR). The Government said the purpose of Element 3 of the Regime is to provide tax certainty to widely held foreign managed funds investing in Australia. It will do this by aligning the tax treatment of certain income or gains made on revenue account with the treatment of comparable returns or gains made on capital account. The Government said it will only apply to funds domiciled in countries that are recognised by Australia as engaging in effective exchange of information.
The draft also proposes to implement the Government’s changes announced on 21 December 2012 to Elements 1 (commonly known as “FIN 48”) and 2 (or the “conduit income” exemption) of the Regime, which have been implemented. The changes will address problems with the operation of the existing widely held and concentration tests to enable membership interests of the fund to be effectively traced through to the underlying members.
Broadly, the amendments would apply from the 2011-12 income year. However, the amendments concerning Elements 1 and 2 would apply to previous income years to which those first 2 elements of the IMR applied.
COMMENTS are due by 26 April 2013.
[LTN 63, 4/4/13]