The Treasurer, has released the second exposure draft for the third and final element of the Investment Manager Regime (“IMR”). This exposure draft follows industry consultation including submissions received on an earlier exposure draft. While the necessary integrity aspects of the draft legislation have been retained, several changes have been made to the legislation including enabling tracing through certain entities and the introduction of provisions to deal with temporary inadvertent breaches of the widely held and closely held tests. These changes will also apply to the previously enacted element 2 of the Investment Manager Regime.
The exposure draft legislation is designed to address uncertainty faced by foreign funds with respect to aspects of Australian tax laws when making passive investments into Australian assets. Under this legislation gains of foreign funds from the disposal of portfolio interests in Australian assets will be largely exempt from Australian tax.