All material subject to strictly enforced copyright laws. © 2022 ITR is part of the Euromoney Institutional Investor PLC group.

Australian government initiates consultations on key tax reforms

Sponsored by Sponsored_Firms_piper.png
The Australian government has initiated several consultation processes

Jock McCormack of DLA Piper considers the recent consultations on the corporate collective investment vehicles regime, venture capital concessions and foreign investment reforms in Australia.

The Australian government has initiated several consultation processes with a view to progressing key proposed reforms to the corporate collective investment vehicles (CCIV) regime, venture capital concessions and a review of the 2021 foreign investment reforms.

CCIV 

 In a joint media release on August 27 2021, the Australian Treasurer and Assistant Treasurer announced further consultation on the proposed CCIV regime with a view to introducing legislation into parliament as soon as convenient. Draft legislation dealing with key regulatory and tax aspects of the proposed regime, along with explanatory materials, were also publicly released.

The proposed CCIV regime would introduce an alternative investment vehicle largely similar to and aligned with the existing attribution management investment trust (AMIT) regime that could be utilised by Australian fund managers to invest in infrastructure, real estate, equities and certain alternative assets.  

The introduction of the CCIV regime is intended to make Australia more competitive internationally and to attract more foreign capital into our managed funds sector.  It is also intended to provide a flexible vehicle structure to assist with the proposed Asia funds regional passport – and related international reciprocity of regulatory recognition/approval.

The CCIV regime was originally proposed as part of the 2016–2017 Australian federal budget however, certain concerns and reservations arose with the earlier draft legislation for this regime, both from a regulatory and tax perspective – which have now mostly been positively addressed.

The highlights of the proposed new CCIV regime which will provide a new type of company limited by shares, include that it will:

  • Provide a new ‘flow-through’ vehicle (other than a trust structure) which is equivalent in tax treatment to the existing AMIT regime.

  • Allow different sub-funds of the CCIV to provide multiple products and investment strategies within the same vehicle.

  • Provide flexibility to cross invest between different sub-funds.

  • Allow a potential listing of a retail CCIV with one sub-fund.

  • Provide access to the Capital Account Election.

The principal tax related amendments are contained in new Sub-division 195-C which effectively deems a trust relationship to exist between the CCIV, the business, assets and liabilities referable to each sub-fund, and the relevant class of members, for purposes of all tax laws (unless specifically excluded, for example the Foreign Acquisitions and Takeovers Act 1975).

The Australian government views the creation of the new CCIV regime as a critical priority in positioning internationally Australia’s managed funds industry. A limited consultation period has been provided through to September 24 2021 and the government is committed to establishing the new regime from July 1 2022.

Venture capital concessions

In July 2021 the Australian government released a consultation paper seeking comments and recommendations on Australia’s principal current venture capital concessions including by reference to the existing Venture Capital Limited Partnership, Early Stage Venture Capital Limited Partnership and Australian Fund of Funds Programmes. These concessions generally support early stage and smaller scale venture capital management and related activities, most particularly to assist Australian start-ups to access capital on a competitive basis.

Consultation with, and submissions to Australian Treasury and Industry Innovation and Science Australia closed on September 3 2021 and focused on encouraging further innovation and entrepreneurial risk taking.

Foreign investment reforms

The Australian Treasury released a consultation paper in late July 2021 seeking feedback and recommendations on a broad range of issues associated with the 2021 reforms to Australia’s foreign investment review/approval regime. Many of the reforms and existing regimes focus on protecting our national security given the rapid technological changes occurring and developments in the international security environment.

It is expected that there will be a continuing review and update of the current foreign investment review regime given the sensitivities

associated with national security, although streamlined processes and other efficiencies are being pursued where appropriate.

Other consultations

Further reviews and consultation on the proposed patent box concession (17% tax rate) impacting principally the medical and biotech sectors, although potentially low emissions energy technology, are currently under way and all of these consultation processes are expected to give rise to recommendations or further reforms in the coming months.



Jock McCormack

Partner, DLA Piper Australia

E: jock.mccormack@dlapiper.com 


 

More from across our site

Japan reports a windfall from all types of taxes after the government revised its stimulus package. This could lead to greater corporate tax incentives for businesses.
Sources at Netflix, the European Commission and elsewhere consider the impact of incoming legislation to regulate tax advice in the EU – if it ever comes to pass.
This week European Commission officials consider legal loopholes to secure minimum corporate taxation, while Cisco and Microsoft shareholders call for tax transparency.
The fast-food company’s tax settlement with French authorities strengthens the need for businesses to review their TP arrangements and documentation.
The full ALP model will be adopted through a new TP regime, which is set to boost the country’s investments and tax certainty.
Tax professionals have called on the UK government to reconsider its online sales tax as it would affect the economy at the worst time.
Tax professionals have called on companies to act urgently to meet e-invoicing compliance targets as the EU plans to ramp up digitisation.
In the wake of India’s ambitious 25-year plan for economic growth, ITR has partnered with leading tax commentators to discuss what the future will look like for India and for the rest of the world.
But experts cast doubt on HMRC's data and believe COVID-19 would have increased the revenue shortfall.
EY’s plan to separate its auditing and consulting businesses might lessen scrutiny from global regulators, but the brand identity could suffer, say sources.
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree