OPINION PIECE - by Michael Potter, Senior Policy Manager – Economics & Tax
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The COVID-19 pandemic has had substantial impacts on the operations of the tax areas of superannuation funds and managed funds. The FSC quickly responded to these impacts by requesting the Government and ATO defer or delay tax work that now has unrealistic deadlines due to COVID-19.
The ATO has provided welcome relief from tax requirements across all businesses, and has written to the FSC indicating it will provide relief for specific requirements for superannuation funds and fund managers – including ongoing ATO reviews of large taxpayers and requirements relating to new fund reporting standards (through the Annual Investment Income Report or AIIR). We have provided details of specific relief to members of FSC tax committees.
We have also been part of a global coalition of fund managers which has asked the Organisation of Economic Cooperation and Development (OECD) and tax authorities to ensure that managed funds can access legitimate tax benefits – addressing the barriers to use of these tax benefits caused by COVID-19. The relevant OECD working party has requested OECD Governments to be aware of these concerns.
Recently, Morningstar released a study into Global Investor Experience relating to tax and regulation. The study found Australia was rated equal last in the 26 surveyed countries, in other words, we are one of the world’s least investor-friendly markets – however a separate part of this study, released in September 2019, showed Australia rated equal first for managed fund fees. This shows Australia’s managed funds perform well despite the adverse effects of poor tax and regulatory settings. The FSC issued a media release arguing the results of the study show it is now time for the Government to ‘step up’ to reduce taxes and red tape in managed funds.