New Anti-roll-up Fund Rules to Replace Foreign Investment Fund Regime

Introduction

The 2009 Federal Budget contained good news with the announcement that the foreign investment fund (FIF) regime would be repealed. However, what would replace this regime has been subject to much speculation. With the release of draft legislation on 28 April 2010, we now have some appreciation of the scope of the new rules that will replace the FIF regime.

The Assistant Treasurer, at the time of last year's Budget stated:

"The FIF rules will be repealed and replaced with a specific narrowly defined anti-avoidance rule that applies to offshore accumulation or roll-up funds. The scope of this rule will be carefully monitored as part of reviewing the effectiveness of the reforms."