Following bipartisan support, legislation to implement a corporate collective investment vehicle (CCIV) and the retirement income covenant (RIC) passed Parliament on Thursday.
“This is a historic day for financial services, with the passage of two vital reforms that have been long-supported by the FSC: the CCIV and the covenant,” said acting CEO of the Financial Services Council (FSC), Blake Briggs.
The FSC has been a strong advocate for the introduction of the CCIV, believing it is key to opening up new export opportunities for Australia’s funds management industry.
“We have one of the largest funds industries in the world, but regulatory settings have discouraged us from using this strong base to export our expertise to the rest of the world,” said Mr Briggs.
“Only 5 percent of the funds managed in Australia comes from offshore ($145 billion out of $2.6 trillion), showing the significant scope for Australia to build on our existing strengths to export this to the globe.”
The CCIV regime will permit fund managers to use a company structure with flow-through tax treatment – this will be more familiar to international investors who are more used to corporate investment structures.
On the retirement front, the retirement income covenant has been praised for creating an obligation on superannuation funds to develop a retirement income strategy for fund members who are retired or nearing retirement.
“The retirement income covenant will help a growing proportion of Australians plan with certainty as they move into their retirement,” Mr Briggs said.
The CCIV and covenant both start operation from 1 July 2022.
