In his address to open the Bank of New York Mellon’s first Australian branch in Sydney on 29 September 2009, the Hon. Nick Sherry confirmed his intention to introduce legislation to repeal the FIF rules “very early” in the 2010 calendar year.

This follows on from the initial announcement in the 2009/10 Federal Budget by his predecessor, the Hon. Chris Bowen, in relation to the proposed changes to the existing foreign source income attribution regimes (including the Controlled Foreign Company (CFC) and transferor trust rules).  It follows extensive consultation with the financial services sector subsequent to this initial announcement and the feedback that swift action in this regard was desired to provide additional certainty.  This is a positive step as it will reduce compliance costs for businesses and promote Australia’s competitiveness in the global funds management market.

The initial announcement in May this year also mentioned that the FIF rules were to be replaced “… with a specific, narrowly defined anti avoidance rule that applies to offshore accumulation or roll up funds”. 

As no further information has been released, we await further details in the upcoming months on this proposed rule and how it will interact with expatriates and their foreign investments and offshore pension plans.

Should you have any queries relating to the above, please do not hesitate to contact Michael van Schaik or Shannon Burdeu on (03) 9614 4444.