On 21 June 2012, Tax Laws Amendment (Investment Manager Regime) Bill 2012 was introduced into the House of Representatives.
The following is extracted from the Explanatory Memorandum.
SCHEDULE 1 to the Bill amends ITAA 1997 to prescribe the treatment of returns, gains, losses and deductions, on certain investments of widely held foreign funds. The amendments will apply where the returns or gains would otherwise be assessable income of the fund only because they are attributable to a permanent establishment in Australia which arises solely from the use of an Australian based agent, manager or service provider. This measure is often referred to as the 'conduit income' measure or 'Element 2' of the investment manager regime (IMR).
SCHEDULE 2 to the Bill amends the Income Tax (Transitional Provisions) Act 1997 to prescribe the taxation treatment of certain returns, gains, losses and deductions for the 2010-11 and earlier income years of widely held foreign funds which have not lodged a tax return and have not had an assessment made of their income tax liability. This measure is often referred to as the 'FIN 48' measure or 'Element 1' of the IMR.
Schedule 1 of the Bill applies to assessments for the 2010 -11 income year and later income years. Schedule 2 of the Bill applies for the 2010-11 income year and previous income years.
In media release No 2012/035, issued 21 June 2012, the Minister for Employment and Workplace Relations and Minister for Financial Services and Superannuation, Bill Shorten, said, of the introduction of the Bill:
"This bill will provide foreign managed funds and their investors with greater certainty as to the tax treatment of certain income of the fund and further the Government's goal of establishing Australia as a regional financial centre...This bill will exclude from Australian tax certain income for the 2010-11 and earlier income years of widely held foreign funds which have not lodged a tax return and have not had an assessment made of their income tax liability," Mr Shorten said.