The Australian Government released Exposure Draft Legislation for public consultation on two interim measures, relating to the FIN48 reporting standard for uncertain tax positions and to foreign sourced conduit income. The measures seek to reduce uncertainty and disincentives for foreign funds seeking to invest in Australia and use Australian intermediaries. Some key points taken from the Exposure Draft are as follows:
The tax treatment of past realised gains and losses from certain Australian investments by foreign funds is clarifi ed. This is most relevant for foreign funds in non-treaty countries where gains on Australian securities are considered to be Australian sourced ‘revenue gains’.
The Australian Taxation Offi ce will be unable to assess Australian tax in respect of IMR income derived by IMR foreign funds. This will extend to non-resident investors in transparent vehicles being partners or benefi ciaries of the IMR foreign fund. This measure will apply to income and gains realised before July 1, 2011.
IMR foreign funds will not be taxed on income or gains from portfolio investments in fi nancial arrangements which are currently taxable solely because the fund retains an Australian based investment manager or intermediary who is deemed to create a permanent establishment in Australia.
The final outcomes will depend on the analysis of a taxpayer’s particular circumstances.