Just as hedge fund managers decided on a theme for their annual AIMA Australia forum this year – ‘A Look Into the Future’ – came the passage last week of the legislation for the Investment Management Regime (IMR) reforms, which have been years in the making. Australian hedge funds and boutiques should be beneficiaries.
The IMR, which was a recommendation of the Johnson Report in 2009, is aimed at encouraging greater foreign investment into Australia, and promoting Australia as a financial services centre. It does this by removing the uncertainties in the application of Australia’s tax laws as they apply to widely held foreign funds and foreign investors. In particular, the investment manager regime clarifies the income tax treatment of gains made by these foreign funds and made by foreign investors investing through Australian fund managers.
Michael Gallagher, the general manager of AIMA Australia, said: “This new regime levels the playing field with other hedge fund centres around the world, and in doing so, promises to transform the hedge fund sector in Australia. Hedge funds managed out of Australia will be more able to attract capital from international institutional investors as a result of these changes, while international fund management firms will find it easier to build a business case for establishing operations in Australia.”
Minister for Finance, Matthias Cormann, said: “The Government believes that the bill strikes an appropriate balance between encouraging foreign investment and maintaining the integrity of the tax system… [the legislation] is very much a part of the Government’s overall plan to update and modernise our tax system. Our tax system has to be adaptive to the changes both domestically and beyond our borders. These changes today lay the groundwork for our continued efforts to ensure our tax system is efficient, modern and well targeted.”
Gallagher said that a finalised IMR, after years of drafts and discussion, “fits rather well” with the theme of this year’s Hedge Fund Forum, to take place in at the Sofitel Sydney Wentworth on September 15. One of the keynote speakers is Steve Kuhn, a partner and co-CIO of Pine River Capital Management of the US, which has a significant investor base in Australia and Asia.
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