Sean Fannin, GBST’s Technical Legislation Consultant reviews the latest legislation that could affect wealth management administration platforms.
Introduction
Corporate Collective Investment Vehicle (CCIV) regime.
In September 2008, the then government commissioned a report as part of its commitment to secure Australia’s future as a leading financial services centre. In November 2009, the Australian Financial Centre Forum released the Johnson Report. Included in the recommendations was the establishment of a Corporate Collective Investment Vehicle (CCIV) regime. The then government accepted this recommendation in December 2011.
As part of the 2016/17 Commonwealth Budget, the government announced their intention to introduce a new tax and regulatory framework for collective investment vehicles. Initially, the collective investment vehicle regime was to commence from 1 July 2017.
In the 2021/22 Commonwealth Budget, the government announced their intention to finalise the CCIV regime with a commencement date of 1 July 2022.
On 27 August 2021, the government released draft tax and regulatory legislation for the CCIV regime for public consultation. This follows on from other consultation documents released by the government since the initial announcement in 2016.
Summary
Currently, Australian managed funds are generally a trust-based structure, and the managed funds industry is predominantly domestically focused. The explanatory material to the draft legislation says that many offshore investors perceive the structure used in Australia as inappropriate for large scale funds management. This reduces the ability for Australian funds management to compete with overseas providers.
A CCIV is proposed to be an investment vehicle with a corporate structure that can offer multiple products and investment strategies (i.e. sub-funds) within the same vehicle. That is, a company used for collective investments.
According to the draft explanatory material, the aim of the CCIV regime is to enhance the international competitiveness of the Australian managed funds industry by allowing fund managers to offer investment products using investment vehicles more familiar to overseas investors by:
- Having equivalent tax treatment of CCIVs with Attribution Managed Investment Trusts (AMIT);
- Allowing CCIVs to use a custodian or a depositary;
- Providing the flexibility to list a retail CCIV with one sub-fund on a prescribed financial market in Australia; and
- Allowing cross investment between different sub-funds of a CCIV.
Further, the proposed laws include:
- Outlining the establishment, operational, and regulatory requirements of CCIVs;
- The implementation requirements for CCIVs; and
- CCIVs being aligned with the tax laws of AMITs with the benefits of flow through taxation.
It is proposed that the CCIV regime will commence from 1 July 2022.
Submissions for comments on the draft CCIV legislation closed on 24 September 2021.
References
Joint Media Release – Assistant Treasurer, Senator the Hon. Nick Sherry, and Minister for Financial Services, Superannuation and Corporate Law – the Hon. Chris Bowen MP – Government Welcomes Johnson Report on Australia as a Financial Services Centre:
https://ministers.treasury.gov.au/ministers/chris-bowen-2009/media-releases/government-welcomes-johnson-report-australia-financial
2016/17 Commonwealth Budget – Budget Paper No. 2:
https://archive.budget.gov.au/2016-17/bp2/BP2_consolidated.pdf
2021/22 Commonwealth Budget – Budget Paper No. 2:
https://budget.gov.au/2021-22/content/bp2/download/bp2_2021-22.pdf
Joint Media Release – Treasurer, the Hon. Josh Frydenberg MP, and Assistant Treasurer, Minister for Housing, and Minister for Homelessness, Social and Community Housing, the Hon. Michael Sukkar MP –Increasing International Competitiveness for Australia’s Managed Fund Industry:
https://ministers.treasury.gov.au/ministers/josh-frydenberg-2018/media-releases/increasing-international-competitiveness-australias
Treasury – Corporate Collective Investment Vehicles – Regulatory and Tax Frameworks:
https://treasury.gov.au/consultation/c2021-200373
Disclaimer
The material included in this blog is designed and intended to provide general information in summary form on a topic which is current at the time of publication. The material may not apply to all jurisdictions. The contents are not intended to constitute legal, business, or other professional advice. It is provided as general information only and is not intended to be comprehensive or a substitute for advice from a qualified professional such as a solicitor. Formal legal advice should be sought in particular matters. GBST Holdings Limited ACN 010 488 874 (“GBST”) makes no statements, representation or warranties about the accuracy or completeness of the information and you should not rely on it. GBST’s blogs may sometimes contain links to other websites for further information. GBST makes no representation or warranty as to the accuracy or validity of information or material on those sites. GBST is not liable for content on those websites. GBST will not be liable to you or any other person for any loss or damage (whether direct, indirect, consequential, or economic), however caused and whether by negligence or otherwise, which may result directly or indirectly from reliance on information contained in GBST’s blog.
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Posted in: Wealth Management Administration
