A corporate collective investment vehicle will be available in Australia from July after Parliament passed legislation with bipartisan support.
The long-promised change introduces a new type of company for funds management, which is more familiar to foreign investors.
Corporate Collective Investment Vehicles (CCIVs) were floated in Australia more than a decade ago and promised by the Coalition in the 2016-17 budget but their introduction stalled, reportedly taking a back seat to Treasury’s work on the royal commission into the banking sector.
The new approach brings Australia in line with the popular collective vehicle approach used overseas. It is aimed at increasing the amount of foreign investment in Australia’s $2.5 trillion worth of managed funds, which is currently only five per cent.
A Senate committee last week gave the greenlight to CCIVs, and on Thursday the Corporate Collective Investment Vehicle Framework and Other Measures Bill passed both Houses without opposition.
The other measures include the cessation of employment as a taxing point for employee share scheme interests, adding new tax deductible gift recipients, and requiring super funds to have a strategy for assisting members approaching retirement.
Australia’s CCIV regime will include a new type of corporate structure for funds management, featuring an umbrella company with all its assets and liabilities segregated into sub-funds.
It is designed to be an alternative to the trust-based managed investment scheme commonly used in Australia
“Together, these changes aim to enhance the international competitiveness of the Australian managed funds industry and attract greater levels of foreign investment into Australia’s financial markets,” Liberal Senator Jonathon Duniam said.
After a marathon debate about the government’s religious discrimination laws, Labor did not oppose the bill, speaking only briefly on it at 5am and offering support in both houses.
The Australian Investment Council (AIC) welcomed the introduction of CCIVs, which it has been campaigning for several years for as a way of attracting foreign capital to Australia.
“The introduction of the CCIV regime is essential for enhancing Australia’s capacity to attract inbound investment and for establishing an internationally competitive foreign investment framework,” AIC chief executive Yasser El-Ansary told InnovationAus.
The investment group, representing Australian private equity, venture capital, private credit funds and institutional investors, said it will continue to call for the introduction of Limited Partnership Collective Investment Vehicles (LPCIV) which was also promised five years ago.
Mr El-Ansary said LPCIVs are the main outstanding component of a globally competitive fund vehicle regime. But it is unclear if the government still supports them, despite LPCIVs also being promised in the 2016-17 budget.
“A globally competitive LPCIV would have a significant and profound impact on the capacity of our industry to invest billions of dollars into great Australian businesses spanning all corners of the economy, and at all stages of development – small, medium and large scale – to help them realise their growth and expansion plans, and create new employment for the future,” he said.
The AIC also welcomed the removal of the cessation of employment as a taxing point in employee share schemes, as Treasury considers broader but still modest reforms to an Australian program described as “complicated and restrictive”.
“Employee Share schemes are an essential part of the innovation ecosystem and enable early stage and growing companies − which have the potential to grow into large and sustainable businesses − to attract and retain employees before they achieve ongoing profitability and to provide their employees ‘skin in the game’ upside as they grow and realise their full potential,” Mr El-Ansary said.
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