Johnson Report tax changes paying fund flow dividends

The Government's 2010 tax changes stemming from the Johnson Report are continuing to pay dividends, according to the latest Cross-Border Flows Report delivered by the Financial Services Council (FSC) and Perpetual.

The report, released today, has revealed that investment by foreign investors into Australia through Australian domiciled investment managers more than doubled from $20.3 billion to $46 billion in the five years between 1 January, 2010 and 31 December, 2015, growing at a compound rate of 17.8 per cent a year.

What is more, the Asia Pacific region represented the most common origin for those fund inflows, with $28.4 billion representing 62 per cent sourced from the region with Japan taking the lead.

The FSC/Perpetual analysis showed that Japan accounted for a quarter or $11.4 billion of the total investments sampled, followed by New Zealand with 11 per cent ($5.2 billion), China five per cent ($2.5 billion) and South Korea five per cent ($2.2 billion).

It said that as a proportion of the Asia-Pacific contribution, Japan represented 40 per cent, New Zealand 18 per cent, China nine per cent and South Korea eight per cent.

The report showed that almost 40 per cent ($18.8 billion) of funds were being invested into overseas based assets and commented that this finding reflected a growing understanding of the global capability of Australian managers.

"This capability will continue to be recognised as initiatives from the Johnson Report, such as the Investment Manager Regime (legislated on 25 June 2015) and new collective investment vehicles (scheduled for 1 July 2017), continue to level the playing field for Australian managers and place them on the same footing as their competitors," it said.

The report said the remaining challenge to increasing fund flows from foreign investors remained Australia's complex and high rate of withholding tax on Australian assets.