May
Your Future, Your Super
Treasury released a consultation paper on the Your Future, Your Super
Regulations and associated measures focusing on Performance Benchmark
reforms and changes to the Portfolio holdings disclosure framework. The
Council’s
submission
outlined the merits of adopting a real-time approach to monitoring and
review of the market implications of the performance benchmarking regime,
once it is implemented and that this be regularly reviewed in a short and
long-term context. The Council continues to work closely with government on
the requirements of the portfolio holdings disclosure framework as a issue
critical for the private capital industry.
June
Software development activities and the Research and Development
Tax Incentive (RDTI)
The Council made a
submission
to the Department of Industry, Science and Technology on refreshed guidance
for software activities and the RDTI. Clear and accessible guidance on
software development activities within the RDTI framework is an essential
element of the innovation and tax system, and is able to drive innovation
in businesses supported by new technologies in areas such as FinTech, cyber
security, food technologies and health and medical services. The refreshed
software guidance is a positive step towards providing information specific
to the software sector to encourage innovation and to support future jobs
and industries.
Senate Committee Inquiry into Australia as a Technology and
Financial Centre
The Council presented a
submission
to the Senate Committee on Australia as a Technology and Financial Centre
on its Third Issues Paper for the final phase of its inquiry.
July
Relief to Foreign Financial Services Providers
In continuing to outline the need for a globally competitive foreign
investment regime, the Council made a
submission
to Treasury on proposed changes to Relief to Foreign Financial Service
Providers. This consultation was part of the Global Talent Attraction
package announced in the Federal Budget and focused on options to restore
previous regulatory relief for Foreign Financial Service Providers and to
create a fast-track licensing process for those that wish to establish more
permanent operations in Australia.
August
Evaluation of the 2021 Foreign Investment Reforms
Consistent with the Council’s extensive involvement in foreign investment
policy and regulatory reforms over recent years, we remain supportive of a
comprehensive clear, predictable and efficient foreign investment review
framework. Although the measures in effect from 1 January 2021 are still
relatively new, the Council believes that consistent themes and issues are
emerging from the experiences of investors and advisors. As highlighted in
our previous submissions, these uncertainties have the potential to slow
down foreign investment into Australian businesses, at a time when foreign
investment capital is of critical importance to the nation’s economy.
Read more.
Employee Share Schemes
The Australian Investment Council made a
submission
to Treasury on the Exposure Draft legislation related to 2021-22 Budget
announcement on changes to the regulatory and tax arrangements for employee
share schemes measures.
Patent Box Consultation
Australia has the capacity to be a world leader in the development of new
medical technologies. To achieve this, the sector will need to be supported
by a patent box regime that is competitive on a global scale and has the
potential to attract investment, to accelerate our commercialisation
pipeline, and to retain the IP within Australia. The Council’s
submission
to Treasury on the patent box consultation advocated for the patent box
design principles to extend beyond the scope of the medical and
biotechnology and clean energy sectors to include industries where
Australia has a comparative advantage in areas such as food technology,
agtech, space and quantum computing and critical minerals processing.
September
Venture Capital Tax Concessions Review
The Council lodged a submission to the Treasury and Industry, Innovation
and Science Australia (IISA) on the
Venture Capital Tax Concessions Review
which was announced as part of the Government’s Digital Economy Strategy
in the 2021–22 Federal Budget.
The consultation has focused on how effective VCLPs, ESVCLPs and Australian
Funds of Funds (AFOFs) have been in attracting domestic and foreign
capital, developing innovation, and expanding venture capital management
skills and experience in the domestic market.
Throughout the consultation, the Council has maintained deep engagement
with both Treasury and IISA who have joint oversight of the consultation
and review process.
Our
submission
was produced in conjunction with a working group of GP and adviser members
and broadly covers:
- the effectiveness of the VCLP, ESVCLP and AFOF programs in supporting the
growth of venture capital in Australia;
- how the programs have contributed to jobs and economic growth, including
economic modelling on the impact of the programs over the next decade;
- where there is scope to improve the programs, including increasing
the the $250 million asset value cap for VCLPs and the $50 million asset
value cap for ESVCLPs to align them with today’s increased valuations, and
continuing to link them to the CPI;
- the growth of new industries such as Medtech, Fintech and Cleantech and
the need to update the programs and associated regulation and legislation
to take these, and other new industry sectors into consideration; and
- the recommendation to introduce a Limited Partnership Collective
Investment Vehicle to attract foreign capital in the longer term.
We are continuing to work closely with Treasury and IISA throughout this
consultation. A report on this review is expected to be handed to the
Treasurer towards the end of this year, and will be subsequently tabled in
the Parliament.
Corporate Collective Investment Vehicles – Regulatory and Tax
Frameworks
The Council has been a long-term advocate for the need to introduce
globally competitive collective investment vehicles in Australia. In
principle, the Council welcomes the introduction of the new Corporate
Collective Investment Vehicle (CCIV) regime, subject to the comments and
observations that we made on the design and structure of the provisions, in
particular the deeming of the sub-funds of CCIV to be trusts for tax law
purposes. Our
submission
also advocates for strong need for a globally competitive Limited
Partnership Collective Investment Vehicle and for the Government to
prioritise its introduction.
R&DTI – Review of the dual-agency administration model
A strong, robust and consistent R&DTI scheme is important for
maintaining the confidence of Australian businesses and entrepreneurs to
invest in the future of our nation. The Council made a
submission
to the Board of Taxation on the R&DTI – Review of the dual-agency administration model
following the Federal Budget announcement on 11 May 2021 and release of the
Consultation Paper in June 2021.
Inquiry into the implications of common ownership and capital
concentration in Australia
The Council has provided a
submission
in response to the Parliamentary Standing Committee on Economics’ Inquiry
into the Implications of Common Ownership and Capital Concentration in
Australia.
Other Policy & Advocacy Initiatives
Division 6C – Negative Control
The Council has continued to progress discussions with the ATO regarding
Division 6C – Negative Control. Following an industry roundtable on 26 May,
the Council followed up with a letter to the ATO reaffirming the Council’s
disagreement with the ATO’s views and application of the laws with respect
to Division 6C of the Income Tax Assessment Act 1936 as
outlined in the ATO Guidance. The Council will reconvene with the ATO to
work through the examples provided in coming weeks once the ATO has
considered the Council’s latest paper.
Tax Determination TD 2011/25
The Legal and Tax Committee has considered key aspects of Taxation Ruling
TR 2011/25 and will continue to consult with the ATO to ensure any changes
are ‘fit for purpose’. The ATO’s private equity compliance team will
present the Council’s final views to other teams within the ATO in the
period ahead.