In the 2009 Federal Budget, the Government announced its intention to repeal the Foreign Investment Fund (FIF) rules. The exposure draft of the Tax Laws Amendment (Foreign Source Income Deferral) Bill (No.1) 2010 which contained the repealing provisions was released by the Assistant Treasurer on 18 December 2009.
Submissions were sought in respect of the proposed legislation.
As a starting point, we welcome the proposed repeal of the FIF rules as we viewed the FIF rules as a rather arbitrary mechanism that yielded significantly different taxation results for similar investment scenarios and caused a significant compliance and administrative burden to be placed on the individual.
Moore Stephens made a submission to Treasury in respect of the draft legislation and made the following recommendations:
- The repeal of the foreign investment fund provisions should not be considered in isolation, rather it should occur as part of the introduction of the international accruals regime to provide taxpayers with certainty. It should not create a policy vacuum.
- There should be no sunset provisions in respect of section 23AK of the Income Tax Assessment Act 1936. The key objective of this provision is to prevent a taxpayer being subject to double taxation by virtue of the operation of the FIF provisions.
We have outlined our specific issues in more detail in our Submission to Treasury.
If you have any questions, please do not hesitate to contact Michael van Schaik on (03) 9614 4444 or [email protected]
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