Sherry reiterates importance of managed investment trust reforms
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Government legislation dealing with the tax arrangements for managed investments trusts is necessary to ensure the managed funds sector is run efficiently and responsibly, according to Assistant Treasurer Nick Sherry.
Speaking at an Investment and Financial Services Association 2010 Leadership Series lunch on Friday, Sherry emphasised the growth of Australia’s managed funds sector — which stood at $1.7 trillion at the end of 2009.
“The sector directly accounts for about 10 per cent of [gross domestic product] — more than our mining sector contributes,” he said.
“However, the dynamic growth of Australia’s managed funds also presents challenges for the industry. It is vital that managed funds are run efficiently and responsibly.”
As such, the Government has set various things in motion to boost key aspects of the regulation of managed investment trusts, said Sherry.
“A key plank of certainty for your industry is the provision of a more certain and competitive Australian tax regime for attracting foreign funds under management,” he said.
“The Government recognises that uncertainty and complexity surrounds the application of the current tax law to managed investment trusts.”
Sherry said the Board of Taxation had called for a review of these tax arrangements in 2008, and is currently considering the final report.
Furthermore, he said the Government has implemented reforms that allow eligible managed investment trusts to elect to apply capital gains tax (CGT) treatment to gains and losses made on disposals of certain assets — primarily shares, units and real property.
“The deemed capital account treatment for eligible managed investment trusts reduces complexity and compliance costs, and boosts the local industry’s global competitiveness,” said Sherry, adding that the changes give managed investment trusts and investors certainty about when they can access CGT concessions on gains.
Sherry added that the concept of managed investment trusts has been expanded to include certain state operated trusts and wholesale trusts that are owned by life insurance companies and complying superannuation funds.
AUTHOR
Caroline Munro
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