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Hi Russell
Thanks for that. The way I read it is that contrary to some reports out there Cullen is actually quite keen and receptive on the IST regime for foreign-based funds.
However, he (like most of the industry) is not receptive to IST on domestic funds. This suggests that maybe he is favouring the local funds management industry over others - such as Australia.
I particularly like the flow through option on local funds as it means investors will be able to better manage their affairs and advisers will be able to add extra value.
Philip
Something I am having difficulty accepting from the Stobo Report is that gains made by active equity managers in a so-called CIV are "capital" gains. They are no different to business profits made by any other trader.
If individuals make gains buying and selling (trading) equities, then those gains are taxable, just like a CIVs. If individuals adopt a buy-and-hold strategy, then realised gains made on sale are capital in nature, just like gains made in an indexed, binding ruling equity fund. Dividends are taxable in either case.
What's missing is some sort of imputation regime for superannuation schemes and the like which can flow gains to individuals so they can be taxed at their marginal rate.
Exempting trading gains made on equities by CIVs will surely only lead to more distortions. Great for the managed funds industry but good for the country?
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Nice to see you blogging Phil - awesome!
Stobo's preferred option would get my vote - because it would sort out the Australian Unit Trusts issue - yet Cullen is not keen, by the sound. What's your analysis on how this will play out?
Cheers
RH