The Tax Laws Amendment (Investment Manager Regime) Bill 2012 has now passed all stages without amendment and effectively awaits Royal Assent after having been passed by the Senate on Thur 23.8.2012. The Bill contains the first 2 elements of the Government’s Investment Manager Regime.
The Bill amends the ITAA 1997 by inserting new Subdiv 842-I to prescribe the treatment of returns, gains, losses and deductions, on certain investments of widely held foreign funds – so-called conduit income. The amendments will apply where the returns or gains would otherwise be assessable income of the fund only because they are attributable to a permanent establishment in Australia, which arises solely from the use of an Australian based agent, manager or service provider.
The Bill also amends the Income Tax (Transitional Provisions) Act 1997 to insert a new Subdiv 840-I to prescribe the taxation treatment of certain returns, gains, losses and deductions for the 2010-11 and earlier income years of widely held foreign funds, which have not lodged a tax return and have not had an assessment made of their income tax liability.
The amendments seek to address the uncertainty surrounding the impact of US accounting standard ASC 740-10 – the amendments are often referred to as the FIN 48 measures or “Element 1” of the IMR.
[LTN 163, 23/8]