AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison
4. Legal, Regulatory or Tax Changes 4.1 Recent Developments and Proposals for Reform There have been numerous legal and regulatory developments and proposals for reform in the financial services industry in Australia in recent years, including some arising from the recom - mendations of the Royal Commission into Mis - conduct in the Banking, Superannuation and Financial Services Industry (the “Royal Com - mission”). Some of the key areas of development and pro - posals for reform impacting the Australian funds market are as follows. The Design and Distribution Obligations Regime The DDO regime commenced on 5 October 2021. This new regime applies broadly to the distribution of retail products and does not apply to non-retail client products, such as wholesale investment funds. Please see 2.3.10 Investor Protection Rules and 3.3.10 Investor Protec- tion Rules for further information. The introduction of the DDO regime represent - ed a fundamental shift in retail consumer pro - tection in financial services and has allowed ASIC to move quickly to respond to potential retail consumer harm. Since July 2022, ASIC’s approach to DDO has moved from facilitation to enforcement, and as of late September 2024, ASIC had issued approximately 88 interim stop orders after finding deficiencies in the TMDs of product issuers, including issuers of investment funds and non-compliance with the reasonable steps obligation associated with distribution. Generally, interim stop orders prevent a product provider from issuing interests in a fund, giving
interests in land-rich entities. No capital gains discount is available for non-resident taxpayers. Where a non-resident investor disposes of an asset that qualifies as TAP (eg, interest in a land-rich Australian fund), the purchaser will be required to withhold 12.5% of the purchase price and remit this amount to the ATO. The non-res - ident investor may be able to claim a tax credit for the amount withheld (which could be refund - able if the tax liability of the non-resident investor is lower than the withheld amount). Managed Investment Trust Where the trust qualifies and elects to be a “managed investment trust” (MIT), certain MIT tax concessions are available, including those stipulated in 2.6 Tax Regime . Broadly, to qualify as an MIT, the trust must satisfy the requirements specified in 2.6 Tax Regime . AMIT The attribution management investment trust (AMIT) regime provides for taxation on an attri - bution basis as opposed to distributing funds on a distribution basis and is designed to provide greater flexibility for trusts and fairness for their investors. Under the AMIT regime, investors are taxed on income that is attributed to them on a “fair and reasonable basis” for each financial year, and the trust would not be liable to tax, provided all its taxable income is attributed to investors. CCIVs A detail of the new CCIV structure is provided in 2.6 Tax Regime .
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