Opportunities for investment in foreign funds by Australian residents

18 February 2011 – The Assistant Treasurer has recently released Exposure Draft legislation for the proposed Foreign Accumulation Fund (“FAF”) rules – intended to replace the repealed Foreign Investment Fund (“FIF”) rules as well as the proposed rewrite of the Controlled Foreign Company (“CFC”) rules.

The release of the Exposure Drafts is welcoming news to both:

• Australian investors investing in foreign funds or foreign companies; and
• Foreign fund managers seeking to offer their products to Australian retail and wholesale investors, including superannuation funds.

The proposed new rules for FAFs and CFCs are intended to remove some of the existing tax barriers that have deterred Australian outbound investment.

A copy of the exposure drafts is available at Exposure Draft – Reform of the foreign source income deferral rules

Industry and public submissions will be accepted by Treasury before the closing date, 18 March 2011.