Australian investment funds will be allowed to be marketed across Asia through a new so-called passport agreement.
Both houses of the Australian parliament passed legislation that will allow investors to tap into Asia’s growing affluent and middle classes under a funds passport agreement between five Asia Pacific nations. The passport is valid in Australia, New Zealand, Japan, South Korea and Thailand.
“This offers our fund managers the opportunity to tap into Asia’s expanding middle class and increasing numbers of high-net-worth and ultra-high-net-worth individuals,” Minister for Small and Family Business, Craig Laundy, said after the legislation was approved.
The new rules will allow Australian managed funds to become passport funds and sell their products to the other participating countries.
“Australian fund managers will be able to sell a single product across Asia and achieve greater economies of scale. This should allow lower costs for consumers,” Minister for Revenue and Financial Services, Kelly Megan O’Dwyer, said in a speech.
Australia’s Financial Services Council (FSC) had called on the government to consider “vital tax reforms” before the legislation was tabled, claiming Australia’s “complex” withholding tax system for fund management companies raises little money “but harms competitiveness”.
“If withholding taxes are not reformed, Australia’s fund managers will be at a major disadvantage in the passport,” FSC boss Sally Loane said. “This is because many investors in passport countries will avoid Australian funds and choose to invest in a foreign fund with a simpler withholding tax.”