The Government has announced that the proposed foreign accumulation fund (FAF) integrity rule will not apply for the 2010-2011 income year: Assistant Treasurer’s media release No 98, 29 June 2011.
The FAF rule is intended to form part of a wider package of reforms to the foreign source income attribution rules, of which the modernised controlled foreign company (CFC) rules will be the centrepiece.
Progress was made in delivering these reforms during 2010 with the repeal of the foreign investment fund (FIF) regime and the deemed present entitlement rules, which received Royal Assent on 14 July 2010.
The Government is in the process of developing the FAF rule and is engaged in public consultation. (For the relevant Treasury discussion papers go here, here and here.)
The Government has received no evidence that deferral activity has emerged following the repeal of the FIF regime, and has therefore confirmed that the FAF rule will not apply for the 2010-2011 income year. The rule will apply for income years starting on or after the date on which it receives Royal Assent.