The Labor government has introduced a bill into Parliament to amend elements of the Investment Manager Regime (IMR).
The bill, introduced yesterday by the Minister for Financial Services and Superannuation Bill Shorten, focuses on an amendment to the income tax law contained in the first two elements of the IMR.
Shorten said the amendments will make Australia "more attractive as a destination for investment" and would boost employment in the financial services sector.
"This bill will provide foreign managed funds and their investors with greater certainty as to the tax treatment of certain income of the fund and further the government's goal of establishing Australia as a regional financial centre," he said in a statement.
The bill will exclude from Australian tax certain income for the 2010-2011 and earlier income years of widely held foreign funds which have not lodged a tax return and have not had an assessment made of their income tax liability, he said.
The first two elements of the IMR are designed to address the impact of the application of United States accounting rules - widely referred to as 'FIN 48' -on managed funds investing in or through Australia.
It is also created to exclude from Australian tax, for 2010-2011 and later income years, certain income of widely held foreign funds that is taxable only because the fund uses an Australian based agent, manager or service provider.
The elements also aim to remove uncertainty as to the tax treatment of 'conduit income' of managed funds as recommended by the Henry review, the statement said.
"This is a complex area of policy and the government is determined to ensure that the legislation achieves its goal of improving Australia's standing as a financial services centre through greater certainty and transparency," Shorten said.
"The bill is a further step in the Gillard Government's commitment to building Australia as a financial centre. The government will continue to consult with industry in the development of the third element of the IMR."
"I call on all members of Parliament to support this legislation."
Opposition assistant treasury spokesman Mathias Cormann has supported the introduction of the "interium" IMR legislation, though said it is "long overdue".
"A robust and competitive Investment Manager Regime was one of the centrepieces of the Johnson Report recommendations on Australia as a Financial Centre released back in January 2010," Cormann said in a statement.
"Minister Shorten first announced these changes in December 2010 and January 2011.
"For the past 18 months Australian fund managers have continuously told the government that overseas investors will only invest through Australia once legislation has passed parliament."
Cormann said the "long delay" of this legislation, coupled with "Labor's uncertain position on doubling the final withholding tax on Managed Investment Trusts", demonstrates that Labor lacks seriousness about developing Australia as a "genuine financial services hub in the region".
"The bill introduced [yesterday] is only an interim step along the path to a full Investment Manager Regime," he said.
"We call on the government to introduce the final phase of the Investment Manager Regime as soon as possible."
The IMR bill was developed after two rounds of exposure draft legislation, including extensive consultation with industry and investors - both domestically and in international financial centres.
