Treasury releases a consultation document proposing a withholding tax for CIVs

Published: 08 November 2016

The Australian Treasury has released a consultation on policy proposals in relation to non-resident withholding taxes for collective investment vehicles (CIV) (here). While wishing to preserve the international competitiveness of its tax system, the Government seems to be aiming at some taxation of non-residents’ income arising in Australia. The consultation considers the following options: (a) a single non-resident withholding tax rate of 5% for CIVs and managed investment trusts (MITs) operating under the Asian Region Fund Passport (ARPF); (b) a uniform non-resident withholding tax of 5% for all CIVs and MITs excluding those investing in real property; or (c) no policy change. The consultation notes the interaction with Australia’s investment manager regime (IMR). The proposals appear to be responding to asset management industry concerns that the current withholding tax regime will inhibit the sector's international competitiveness which the IMR was introduced to assist. In the 2016-17 Budget, the Government announced that it will introduce two new internationally recognised CIVs which are intended to make Australian managed funds more attractive to foreign investors and enhance opportunities for the export of fund management services. Written submissions are due by Friday 2 December 2016. AIMA’s Australia National Group will consider whether to respond to the discussion paper. For further information, please contact Paul Hale or Enrique Clemente.