On 16 December 2011 the Minister for Financial Services and Superannuation announced changes to the prospective tax treatment of foreign managed funds invested in Australian securities. These changes are in addition to two previous changes. The first, announced on 17 December 2010, addressed the uncertainties arising from tax positions dating from the inception of many foreign managed funds active in Australia. The second, announced on 19 January 2011, was in regard to the income tax applicable to foreign funds that use an Australian financial intermediary. This third element of changes provide greater certainty in relation to the income taxation treatment of foreign managed funds by restricting the application of Australian income tax law, subject to appropriate safeguards to protect the integrity of the corporate tax base. The changes are consistent with the recommendations of a Board of Taxation report on the design of an Investment Manager Regime for foreign managed funds, as part of its review of the taxation treatment of collective investment vehicles. A Regulation Impact Statement was prepared by the Treasury and has been assessed as adequate by the Office of Best Practice Regulation.
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