The Australian government released exposure draft
legislation on the tax treatment of corporate collective
investment vehicles (CCIVs) on Wednesday, December 20 2017. The
draft legislation is open to public consultation until February
2 2018 and will apply to income years commencing on or after
July 1 2018.
A CCIV is a company that is registered under the Australian
Corporations Act and will provide a new type of CIV which is
internationally recognised and readily marketed to foreign
investors, including through the Asia Region Funds Passport. A
complying CCIV (or attribution corporate collective investment
vehicle (ACCIV)) will have access to an attribution or
'character flow through' model of taxation, generally aligned
with the attribution managed investment trust (AMIT) tax
regime. Principally, this will include flow-through tax
treatment, deemed capital account treatment (under an
election), and certain eligible non-resident investors will be
taxed at concessional rates (generally 15%) on attributed
income, subject to Australia's withholding tax provisions.
These concessions are directed at, principally, passive type
investments by a sufficiently widely held corporation.
A new concept of an attribution investment vehicle (AIV) has
been introduced which includes both ACCIVs and AMITs.
The CCIV tax regime was released together with the exposure
draft legislation for the Asia region funds passport and will
be subject to close consultation and likely finalised and
passed through the Australian Parliament in the coming
Cross-border related party financing arrangements
The Australian Taxation Office (ATO) released its final
Practical Compliance Guideline, PCG 2017/4, on its compliance
approach to cross-border related party financing arrangements
and related transactions on December 18 2017. Essentially, the
ATO has introduced a risk categorisation or framework for
related party financing arrangements and strongly encouraged
multinationals to self-assess their tax risk position.
As a part of this encouragement, the ATO is offering to
remit penalties and interest for voluntary disclosures for both
historical and prospective financing arrangements, where
certain pre-conditions are met.
The ATO has outlined various tax risk indicators which
relate to, among other things, third-party debt of the
borrowing group, security/collateral arrangements, subordinated
debt, exotic features and the currency of the debt.
All Australian and foreign-based multinationals with
material cross-border financing arrangements should promptly
review their existing and proposed related party financing
contracts in the context of PCG 2017/4.
Diverted profits tax (DPT) update
The ATO on December 18 2017 released Law Administration
Practice Statement PSLA 2017/2 on the proposed administrative
process for making DPT assessments. Further, it released draft
Law Companion Guideline LCG 2017/D7 on practical guidance for
taxpayers on key aspects of the DPT, including the principal
purpose test, sufficient foreign tax test, and the sufficient
economic substance test.
Jock McCormack (firstname.lastname@example.org)
DLA Piper Australia
Tel: +61 2 9286 8253
Fax: +61 2 9286 8007