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Tax in Australia: Draft Legislation is Tabled to Remove Foreign Investment Fund Rules
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| Author: |
Alan Collett |
| Date: |
Monday, December 21, 2009 |
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The Australian Government's Assistant Treasurer has released draft legislation that will repeal the Foreign Investment Fund (FIF) rules.
The FIF Rules are complex, and are most commonly encountered in their impact on individuals who move to Australia while retaining certain investment products located outside Australia, such as pension funds in the accumulation phase, life policies with surrender values (including endowment policies), investment bonds, and other products that are concessionally taxed in the UK, eg ISAs and PEPs.
In broad terms - and subject to certain exemptions - the FIF Rules require taxpayers to include deemed income in their annual personal tax returns, which represents the annual growth in the value of their investments/pension funds, whether or not the investment or pension fund has been liquidated.
According to the Australian Government:
"Australia's attribution rules, the controlled foreign company (CFC) rules, foreign investment fund (FIF) rules, transferor trust rules and the deemed present entitlement rules, are notoriously complex.
The Australian Financial Centre Forum, established by the Government in September 2008, has emphasised the need for reform of this area based on representations from industry through the Forum.
The Government will repeal the FIF provisions and replace them with a specific, narrowly-defined anti avoidance rule. The Government will also modernise and rewrite the CFC provisions into the Income Tax Assessment Act 1997, repeal the deemed present entitlement rules, and amend the transferor trust rules to enhance their effectiveness and improve their integrity."
The Australian Government is seeking input from interested parties, as discussed at the weblink below.
Comment
We welcome this move, not least because the FIF rules are complex - we suspect that ignorance or an inability to comprehend the legislation means the tax revenue deriving from their existence is relatively insignficant.
This said, the legislation that is to replace the FIF provisions is yet to be seen - in our experience legislators have a tendency to err on the side of detail ... keep a watch on Go Matilda News for more information as and when it becomes known to us.
The Go Matilda Accounting and Tax team has many years of experience assisting individuals with the submission of tax returns and the agreement of tax liabilities in the UK and Australia.
We will be delighted to have an initial free discussion with you if you have a need to lodge a tax return in the UK and/or Australia - or wish to discuss the FIF Rules and their application to your personal situation.
Our fees are fixed in advance, and we can usually progress an outstanding tax issue quickly if a deadline is approaching.
We will be pleased to call if you wish to enter your details here, or contact us for a free initial discussion - ask to speak with Alan Collett or Jane Cooper, both of whom are tax qualified in the UK and Australia.
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| Weblink: |
http://assistant.treasurer.gov.au/displaydocs.aspx?doc=pressreleases/2009/117.htm&pageID=003&min=njsa&Year=&DocType= |
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