The Federal Government will begin consultation on finalising its Corporate Collective Investment Vehicles (CCIVs) regime, which will allow fund managers to offer investment products using vehicles that are more familiar to overseas investors.
Treasurer Josh Frydenberg said: “As part of a commitment in the 2021-22 Budget to complete the implementation of the CCIVs regime, the Government has released draft legislation for public consultation that implements the tax and regulatory components of the CCIV regime and their related explanatory materials”.
In response to the submissions from previous consultations, the Government said the regime would provide:
- Equivalent tax treatment of CCIVs with that of Attribution Managed Investment Trusts;
- Flexibility for CCIVs to use a custodian or a depositary;
- Flexibility to list a retail CCIV with one sub-fund on a prescribed financial market in Australia; and
- Flexibility to cross-invest between different sub-funds of a CCIV.
The Financial Services Council (FSC) previously said in a submission that overseas fund managers were unlikely to service clients in Australia unless certain regulations were changed, and welcomed the revised draft legislation.
Sally Loane, FSC chief executive, said the FSC would review the draft closely with members and respond to the consultation in due course.
“The FSC has been advocating for the introduction of the CCIV for many years because of its potential to unlock significantly increased export investment in Australia’s sophisticated funds management industry,” Loane said.
“We are supportive of significant changes to the revised draft, particularly to remove tax penalties on CCIVs, increase flexibility on CCIVs using custodians, improve the ability of CCIVs to list on financial markets, and allow cross-investment between CCIV sub-funds.”
Loane said the FSC long advocated for using Australia’s funds management sector’s untapped potential as a major export opportunity.
“Finalising a competitive CCIV regime and removing tax barriers on Australian fund managers will help deliver an economic windfall as the economy recovers from the COVID-induced downturn,” Loane said.
“Foreign capital currently only contributes just over 5% of investment into Australian managed funds, $126 billion as a proportion of $2.2 trillion.
“We want to see Australia financial services industry continue to grow, and reforms such as the CCIV will ensure the industry and Australia can help drive the economy forward.”
