Federal Budget 2021-22: Corporate Collective Investment Vehicle Regime
Tax Law - 12 May 2021
Corporate Collective Investment Vehicles (CCIV) are a common structure used (in different forms) in many offshore jurisdictions. To date Australia has lacked a CCIV regime, despite this being first announced in the 2016-17 Budget.
In the current Budget, the Government has committed to establishing a CCIV regime by 1 July 2022.
This will reduce the competitive disadvantage funds and other businesses in Australia currently experience with a lack of a CCIV regime that offshore investors would be familiar and comfortable with, increasing the ability to source offshore capital funding.
A Corporate Collective Investment Vehicle (CCIV) is a vehicle to allow indirect investment by a group of investors, while maintaining flow-through taxation to minimise double taxation. Examples of a CCIV include a UK open-ended investment company and the EU’s investment funds structured under the European Citizens’ Rights, Involvement and Trust (ECIT) directives.
To date, the closest Australia has come to a true CCIV is the Managed Investment Scheme product, which is based on a unit trust model. This is both not familiar to foreign investors used to utilising a traditional CCIV structure, and limits the flow-through taxation benefits associated with a CCIV.
The Government first proposed a CCIV regime some five years ago as part of the Ten Year Enterprise Tax Plan. This plan included the infamous company income tax rate cuts that have since stalled and been watered down, with minimal attention on the potential CCIV regime.
Successful implementation of the CCIV regime will provide Australian funds, entrepreneurs and other business with additional potential sources of funding from CCIV-savvy investors, and will remove the competitive disadvantages Australia suffers from jurisdictions that already offer a CCIV structure.
The information contained in this blog is general in nature and should not be considered to be legal, tax, accounting, consulting or any other professional advice. In all cases, you should consult with a professional advisor familiar with your factual situation for advice concerning specific matters before making any decisions. By reading this blog, you confirm your understanding of this disclaimer.