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Asset and wealth management

Government to introduce new Collective Investment Vehicles

To complement the commencement of the Asia Region Funds Passport (the Passport), the Government has committed to the introduction of two new types of collective investment vehicles (CIVs) - a corporate CIV and limited partnership CIV, both of which will have flow through status for tax purposes. The corporate CIV will be introduced for income years starting on or after 1 July 2017, with the limited partnership CIV to follow one year later. The new CIVs will be required to meet similar eligibility criteria as managed investment trusts, such as being widely held and engaging primarily in passive investment.

Managed investment trusts are currently the most common form of CIV in Australia, however many foreign investors are unfamiliar with trusts and this acts as a blocker for inbound investment into Australia. The introduction of these new vehicles is a welcome move which should increase the global competitiveness of Australia’s funds management industry, and it is pleasing that the Government has committed to implementing these measures swiftly to align with the commencement of the Passport in 2017.

The Passport is an international initiative that facilitates the cross-border offering of eligible collective investment schemes while ensuring investor protection in participating jurisdictions. According to the Statement of Intent signed by Australia in September 2013, the Passport aims to “facilitate the growth and competitiveness of financial markets in the region and the fund management industry, creating a common framework that has the effect of reducing the regulatory inconsistency and overlap faced by collective investment scheme operators seeking to offer CIS [Collective Investment Schemes] in multiple economies”. The Asian Region is a growth area for funds management, with USD 4.5 trillion assets under management as at June 2015. A broader range of CIVs combined with the Passport and the new Attribution Managed Investment Trust (AMIT) regime (expected to be enacted by Parliament this week) will help Australian funds get a foothold throughout the broader Asian region.

Last week the Assistant Treasurer and Minister for Small Business signed the Passport Memorandum of Co-operation which sets out the internationally agreed rules and cooperation mechanisms of the Passport, and comes into effect on 30 June 2016. From this time, participating economies have up to 18 months to implement their domestic arrangements to support the Passport. It is expected that the first Passport-compliant schemes will be offered in 2017. For further information on the Passport, please refer to our publication Asian Passports, the coming of age.

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Ken Woo

Partner, PwC Australia

Tel: +61 2 8266 2948

Mark O'Reilly

Asia-Pacific Americas M&A Tax Leader, PwC Australia

Tel: +61 414 498 586

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