Australian Tax Brief

IMR and FIN48 tax exemption legislation has been introduced into Parliament
26 June 2012

Last week, legislation to exempt eligible foreign funds from Australian income tax was introduced to the Australian Parliament.

The tax exemption applies to a widely held foreign fund as follows:

  • FIN48 exemption – on income and gains made on eligible investments on or before 30 June 2011
  • Investment Manager Regime (IMR) exemption – on income and gains made on eligible investments from 1 July 2011.

The introduction of an Investment Manager Regime was a key recommendation of the Australian Financial Centre Forum's report, Australia as a Financial Centre, Building on our Strengths. The IMR also implements the recommendations of the Board of Review of an Investment Manager Regime on foreign managed funds.

The IMR exemption provides greater certainty to IMR foreign funds on their Australian tax position subject to understanding and confirming the eligibility of the foreign fund to be an IMR foreign fund, and that the exemption applies to IMR income of the foreign fund.

In this Australian Tax Brief we summarise the key aspects of the FIN48 and IMR exemptions, analyse some of the core requirements – including what is an IMR foreign fund and what IMR income is not subject to Australian tax – and the implications for income and revenue gains and capital gains tax.

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Author(s) Karen Payne, Michael Ward