Alternative Investment Management Association
The UK’s investment manager exemption (IME) is a form of ‘safe-harbour’, designed to prevent a non-UK fund from having a taxable presence (or permanent establishment) in the UK by virtue of activities carried on in the UK by an investment manager.
The IME only applies to certain ‘investment transactions’, set out in government regulations. In addition to a transaction being an investment transaction, there are several conditions which must be met for the IME to be satisfied. Broadly, these are as follows:
AIMA has been involved in the Australian Government’s proposals for an investment manager regime and has made submissions to the Government on the changes to current rules and the proposed implementation of an investment manager regime (“IMR”). In December 2011, the Government announced a third and final element of the regime - see release linked below. This followed announcements of a foreign fund 'FIN 48' tax amnesty and proposals for conduit income exemption rules (introduced in late 2010 and early 2011, respectively, and for which legislation should be finalised and introduced in first half 2012). Broadly, the IMR provides that Australian-source income, gains or losses from portfolio interests or financial arrangement investments by a foreign managed fund will be excluded from calculation of the fund’s taxable income (and that of its non-resident investors). The new rules are operational immediately, backdated to apply from 1 July 2011.
The IMR will apply only to foreign managed funds domiciled in countries that are recognised by Australia as engaging in effective exchange of information. There is an extensive list of information exchange agreements so recognised, including with the Cayman Islands, Jersey and Guernsey, so that such jurisdictions are, accordingly, believed to be covered by the IMR. The Government is consulting widely on the legislation to implement the final element of the regime and AIMA Australia will remain closely engaged with this.
Australian Government Release re Investment Manager Regime (December 2011)