Australia: A (new) Reason to Invest in Aussie Funds
By: Jim Bulling and Cathy Ma
Legislation Passes Parliament
The Australian Federal Government passed the long-awaited Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021 on 10 February 2022. The new regulatory and tax framework for Corporate Collective Investment Vehicles (CCIV) will commence on 1 July 2022.
This reform is a welcome step forward for the Australian funds management industry and is aimed at increasing the competitiveness and familiarity of Australian investment offerings to offshore investors.
The key features of the CCIV include a combination of regulatory and tax components:
- A CCIV will be an Australian-resident company limited by shares, incorporated under and regulated by the new Chapter 8B of the Corporations Act 2001. It will be operated by a sole corporate director, which must be a public company holding an Australian Financial Services License (AFSL).
- A CCIV will be incorporated as wholesale or retail, both of which must be registered with the Australian Securities and Investments Commission (ASIC). If even one investor is retail, the CCIV must register as retail and comply with additional regulatory requirements.
- A CCIV is an umbrella vehicle comprised of one or more sub-funds, each deemed a unit trust and separate legal entity to be registered with ASIC. Given its ‘stand-alone’ character, the assets of one sub-fund cannot be applied to meet the liabilities of another sub-fund. The sub-fund structure enables a single CCIV to offer multiple products and investment strategies and allows for cross-investments between sub-funds within the same CCIV.
- The tax framework for a CCIV ensures the flow-through tax arrangements applicable to an attribution managed investment trust (AMIT) are available to a CCIV subject to meeting certain eligibility criteria.
Next Steps for the Funds Industry
As the commencement date nears, investment fund stakeholders must consider the opportunities for investment arising from the new CCIV regime and whether their investment offerings might include a CCIV structure.