Collective investment vehicles proposed changes
The Government has announced the introduction of a new tax and regulatory framework for two new types of collective investment vehicles (CIVs). CIVs allow investors to pool their funds and have them managed by a professional funds manager.
Staged introduction of corporate and limited partnership CIVs
Under the new framework, a corporate CIV will be introduced from the income year starting on or after 1 July 2017 and a limited partnership CIV will be introduced from the income year starting on or after 1 July 2018. The new CIVs will still need to satisfy similar eligibility criteria as a managed investment trust. This includes being widely held and engaging in primarily passive investment. Investors in the new proposed CIVs will generally be taxed as if they had invested directly.
The proposals are intended to enhance the international competitiveness of the Australian managed funds industry and maximise the effectiveness of related Government initiatives aimed at increasing access to overseas markets, including the Asia Region Funds Passport.
Though long awaited, these changes are a welcomed response to the Board of Taxation’s 2011 Review of Taxation Arrangements of CIVs. They will help Australia attract foreign investors (such as foreign pension funds) by offering legal structures that are more familiar to them.