International investors get tax cut for Australian managed funds

7 July 2009

The start of the new financial year in Australia – on July 1 – brings a tax cut for international investors in Australian managed funds (PDF).

The withholding tax rate on rent and some other income distributed from Australian managed funds to non-residents has fallen to a flat and final 15 per cent.

The payment must be made to a country which has a tax information exchange agreement with Australia.

Under these important reforms, foreign investors will not only benefit from a reduced rate of taxation on Australian sourced gains, but will also no longer be required to file a tax return.

In further good news for investors, the withholding tax rate on fund payments will fall again to a flat and final 7.5% from 1 July 2011. 

“These tax cuts will be of particular benefit to investors in Australian property and infrastructure funds,” said Richard Gilbert, CEO of the Investment & Financial Services Association (IFSA). 

“Australia’s competitive tax rates for foreign investors complement our mature, innovative and well regulated financial services industry,” Mr Gilbert said. 

“In addition, the Australian Government is committed to developing Australia’s role as a financial services centre in the region.”

He said that this new measure creates a compelling case for foreign savings to be invested in Australian managed funds at a time when capital is needed to stimulate economic activity.

“Foreign investment is vital to the long-term growth prospects of the Australian economy.”