There are two interesting announcements in the 2021-2022 Budget papers affecting fund managers. They relate to new investment vehicle structures and Australian financial services (AFS) licensing of foreign financial services providers.
Corporate collective investment vehicles
The Government announced that it will finalise the corporate collective investment vehicles (CCIV) component of the measure previously announced in the 2016-17 Budget, with a revised commencement date of 1 July 2022.
The CCIV is an investment vehicle with a corporate structure that provides flow-through tax treatment. The Government states that this investment vehicle will enhance the international competitiveness of the Australian managed funds industry by allowing fund managers to offer investment products using vehicles that are more familiar to overseas investors.
AFS licensing relief for foreign financial services providers
The Government also announced that it will consult on options to restore previously well-established regulatory relief for foreign financial service providers (FFSPs) who are licensed and regulated in foreign jurisdictions with comparable financial service rules and obligations, or have limited connection to Australia, from holding an AFS licence, in order to reduce duplicate regulatory requirements. This relief was limited to FFSPs that deal with wholesale clients and professional investors.
The Government states it will also consult on options to create a fast-track licensing process for FFSPs who wish to establish more permanent operations in Australia. Fast-tracking is intended to shorten application timeframes and reduce barriers to entering the Australian market.
The reforms proposed by the Government appear to have the intention of removing some or all of the ASIC licensing regime for FFSPs that is currently in place (subject to a transition period), as described in our earlier article.