Following the legislation of the first two elements of the IMR in August last year, the Government confirmed on the eve of the Christmas-New Year break its intention to introduce the third and final element of the IMR into Parliament in the first half of 2013.

With the introduction of the Significant Investor Visa in November 2012 as a potential new source of capital for Australian fund managers, these are positive developments for the Australian funds management industry.

We welcome this announcement, as it is another step towards providing opportunities for Australian fund managers to increase their funds under management.

The main improvements to the IMR are:

  • A technical correction to the widely held and concentration tests in the IMR legislation, in which funds must have a minimum of 25 members. It has been acknowledged that in its current form the legislation inappropriately excludes 'feeder funds' that have a large underlying investor base, so the legislation will be corrected to allow tracing through such funds to determine if these tests are satisfied.
  • An extension of the FIN 48 exemption in IMR 1 beyond 30 June 2011 under IMR 3. As noted in the Moore Tax News article published on 12 March 2012 (when the second exposure draft legislation for the IMR was released for public consultation), the FIN 48 exemption aims to provide certainty for US funds investing in Australia on their Australian income tax exposure due to concerns raised on reporting obligations in the US under FIN 48 (which deals with reporting uncertain tax positions).
  • An extension of the tax exemption in IMR 2 for foreign funds appointing Australian managers to manage domestic assets held solely on capital account to also include the management of local assets held on revenue account under IMR 3.

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