Budget changes to Funds Management industry mean more costsDOWNLOAD
15 May 2013: Gary Howard, head of Financial Services Tax at Deloitte noted that the Government made several announcements in the Budget relevant to the Financial Services industry.
“Fund managers will be required to put in place systems to withhold 10% of the purchase proceeds when an entity acquires any non-portfolio interests in Taxable Australian Real Property (TARP) assets from non-residents. This means that for instance a fund manager will need to determine whether something is a TARP asset and update systems to withhold and remit the tax.
“Another change, which will have a relatively wide ranging effect, is the proposed removal of the interest deduction on borrowings to fund outbound investments. This announcement has the capacity to impact outbound investment by Australian multi-national banks and financial institutions, and will force these entities to trace sources of funding when investing offshore.
“The announced exemption for dividends on non-portfolio equity interests will also impact the financial services industry. It is proposed to extend the exemption to dividends paid to Australian companies through trusts and partnerships. This will mean that fund managers will need to identify and report such dividends. It is also interesting to note that this does not apply to Australian trusts and superannuation funds,” said Howard.
“These changes will involve additional costs to the Australian Funds Management industry.”