With the Investment Manager Regime (IMR) finally passing into law, foreign fund managers must determine whether they qualify for a tax concession in Australia, says PricewaterhouseCoopers.
The third and final element of the IMR, which exempts foreign funds from Australian tax on Australian-source gains, has received royal asset.
According to a note published by PricewaterhouseCoopers (PwC), the new legislation applies to assessments for the 2015/2016 tax year and subsequent years.
Foreign funds have the option to apply the amendments to earlier tax years beginning 1 July 2011 through 30 June 2015, said PwC.
Foreign funds can apply for either a direct concession or an indirect concession, depending on whether the fund is administered by a wholly foreign entity or by an 'independent Australian fund manager' on the foreign fund's behalf.
"Now that all tranches of the IMR legislation have been passed, foreign funds should consider in detail how the rules apply to their particular facts and circumstances.
"While the act is broader than prior exposure drafts, not all funds may qualify for the concession. If they do not qualify, they may be subject to Australian tax and have a filing obligation in Australia.
"Foreign funds that invest in Australia should consider undertaking rigorous analysis to confirm whether they qualify for either the direct or indirect concession and whether it is beneficial to apply the modified rules to earlier income years," PwC said.
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