Document ID: chunk:federal_register_of_legislation:C2012A00126:clause:1_1:p1
Version: federal_register_of_legislation:C2012A00126
Segment Type: clause
Provision Reference: sch 1 cl 1 (pt 1/13)
Character Range: 5487–8511

1  At the end of Division 842
Add:

Subdivision 842‑I—Investment manager regime

Guide to Subdivision 842‑I

842‑200  What this Subdivision is about

      This Subdivision includes rules about the taxation of certain foreign funds with investment income or losses which are treated as being attributable to a permanent establishment in Australia solely because the fund retains the services of an Australian based agent, manager or service provider.
      Where the conditions in this Subdivision are satisfied:
         • returns or gains relating to financial arrangements (known as IMR income) are non‑assessable non‑exempt income or disregarded; and
         • deductions and losses relating to financial arrangements (known as IMR deductions) are disregarded; and
         • capital gains relating to financial arrangements (known as IMR capital gains) are disregarded; and
         • capital losses relating to financial arrangements (known as IMR capital losses) are disregarded.
      These amounts are also disregarded if a foreign resident beneficiary of a trust, or a foreign resident partner in a partnership, receives them (or amounts attributable to them) through one or more interposed trusts or partnerships.

Table of sections

Operative provisions
842‑205 Objects of this Subdivision
842‑210 Treatment of IMR foreign fund that is a corporate tax entity
842‑215 Treatment of foreign resident beneficiary that is not a trust or partnership
842‑220 Treatment of foreign resident partner that is not a trust or partnership
842‑225 Treatment of trustee of an IMR foreign fund
842‑230 IMR foreign fund
842‑235 Wind‑down phases
842‑240 Widely held test and concentration test
842‑245 Financial arrangements
842‑250 IMR income and IMR deduction
842‑255 IMR capital gain and IMR capital loss
842‑260 Non‑IMR net income, non‑IMR Division 6E net income and non‑IMR net capital gain
842‑265 Non‑IMR partnership net income and non‑IMR partnership loss
842‑270 Pre‑2012 IMR income and pre‑2012 IMR capital gain

Operative provisions

842‑205  Objects of this Subdivision
 (1) The objects of this Subdivision are to ensure that:
 (a) foreign funds are not subject to Australian income tax in respect of certain *financial arrangements solely because they engage the services of an Australian based agent, manager or service provider; and
 (b) Australian resident taxpayers continue to be subject to tax on their worldwide income; and
 (c) the benefits of the tax concessions in this Subdivision are only available where foreign funds are widely held and are not owned by a small group of investors.
 (2) This is achieved by:
 (a) treating certain *ordinary income and *statutory income as *non‑assessable non‑exempt income; and
 (b) disregarding certain deductions; and
 (c) disregarding certain *capital gains and *capital losses; and
 (d) requiring foreign funds that seek to benefit from the tax concessions in this Subdivision to pass a widely held test and a concentration test to show that they are not controlled