AUSTRALIA Law and Practice Contributed by: Andrew Stone, Dhanushka Jayawardena, Andrew Choi and Chris Kinsella, Holding Redlich
For retail clients: • financial adviser networks – including fee-for- service financial planners, as well as stockbroking and accounting firms with licensed financial advice businesses; • digital platforms – online investment platforms that offer alternative investments to retail clients, including robo-advisers; • traditional retail channels – including master trust and wrap platforms offered by major institutions; and • listed investment companies or listed investment trusts. 4.6 Private Placements Australia has a well-developed private placement industry and agents are widely engaged by foreign fund sponsors. Placement agents and similar service providers are usually familiar with all Australian regu - latory rules relating to their businesses, including the holding of a relevant AFSL. Foreign managers who are considering engaging with an Australian placement agent typically consider applicable exemptions from any obligation to hold an AFSL. Licensing relief may be necessary or desirable, including on the basis outlined in 3.1 Origin of Pro- moters/Sponsors of Alternative Funds . 4.7 Compensation and Placement Agents Use of Australian placement agents and similar ser - vice providers by foreign managers is common. Place - ment agents are regulated by ASIC and typically hold an AFSL authorising the placement agent to (at least), advise and deal in a range of financial products. If personnel of the fund manager are to be compen - sated for sales efforts, then the applicable commercial arrangements with the placement agent would need to be considered and potentially discussed before agreeing terms. It is not uncommon for placement agents to require exclusivity in Australia. If a manager has existing rela - tionships with capital sources in Australia (or else - where), then the manager may request the placement agent to not cover those capital sources. In these cir -
cumstances, the manager would not be required to remunerate the placement agent in connection capital raised from those sources. The manager’s personnel could then be compensated for sales efforts in con - nection with those sources. If the manager’s personnel are providing the financial service of giving “financial product advice”, or “deal - ing” in relation to financial products, then considera - tion should be given to whether an appropriate AFSL authorises those services or whether an applicable exemption is available. 4.8 Tax Regime for Investors Australian investors in alternative funds face differen - tial tax treatment based on their investor classification, with distinct rules applying across investor types. Corporate Investors Corporate investors are taxed at the standard com - pany tax rate of 30% on their proportionate share of fund income and capital gains. They receive full flow- through treatment without access to CGT discount concessions. Franking credits from investments in Australian companies flow through to corporate inves - tors, providing tax relief. The effect is generally that no further taxation applies at the level of the corporate investor. Individual Investors Individual investors face marginal tax rates up to 47% (including the Medicare levy) on fund income distri - butions. Capital gains from fund investments held for more than 12 months qualify for the 50% CGT discount, effectively reducing the maximum rate to 23.5%. Superannuation Funds Complying superannuation funds are entitled to con - cessional taxation at 15% on both income and capi - tal gains, with capital gains entitled to a 33⅓% CGT discount first. In the pension phase, superannuation funds may qualify for tax-free treatment on investment earnings. Foreign Investors Non-resident investors benefit from the managed investment trust withholding tax regime, paying only
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