IMR arrangements extended

The Government has used the Federal Budget to confirm its extension of the Investment Manager Regime arrangements, something it claims will give foreign managed funds and their investors more certainty for the 2010-11 income year.

The Assistant Treasurer and Minister for Financial Services, Bill Shorten, said the Government would be introducing amendments to the income tax laws to prevent the Australian Taxation Office (ATO) from raising assessments for certain investment income of foreign managed funds for the 2010-11 income year, where the fund has never lodged an Australian tax return.

He said such funds were “an important source of mobile capital” and that providing tax certainty would enable them to comply with US reporting requirements and minimise the risk of them withdrawing from investing in Australia.

Shorten said the measure represented an extension of the arrangements announced in December last year, and which had applied to the previous financial year.

"Tonight's announcement will provide tax certainty for foreign managed funds and their investors, which invest around $57 billion in Australia, for the 2010-11 income year," he said.

Shorten said the Board of Taxation was currently examining the design of an investment manager regime as part of its review of the tax treatment of collective investment vehicles. 

"To address the issue of the ongoing tax treatment of these investments, I have asked the Board of Taxation to report to me on an investment manager regime as it relates to foreign managed funds by the end of the third quarter of this year," the minister said.

He said that extending the previously announced measure would allow the Government to consider the board's report prior to making a final decision on the tax treatment of this investment.