We recently reported a passing reference in the most recent Federal Budget that the long-awaited corporate collective investment vehicle (CCIV) regime was back on the agenda with a proposed commencement date of July 2022. Now, the government has released draft legislation with that ambitious date still the target.
Here, partner Langton Clarke recaps the features of the CCIV regime and highlights some of its benefits and drawbacks.
It has been almost a decade since the introduction of CCIVs in Australia was first raised. Changes of government and other significant events delayed the introduction of the new regime, but it now seems it will become a reality.
To recap, Australia’s funds management industry has over the years become dominated by trust-based structures (think of the amount in superannuation). Whilst they have served the domestic market well, government and industry alike have realised trusts are not familiar to offshore investors, particularly our close investment neighbours and their huge wads of investment capital.
The new CCIV regime will herald in a new investment vehicle designed to increase the competitiveness of Australia’s managed funds industry internationally to attract offshore investment and offer flow-through tax treatment.
As a reminder, the fundamental features of a CCIV are as follows:
A CCIV is really a hybrid—a company that also has the best (some may say conservative) elements of the managed investment scheme regime which have been in place in Australia for over 20 years.
The table below shows a comparison of the features of retail and wholesale schemes as against the proposed new retail and wholesale CCIVs.
|Feature/requirement||Retail CCIV||Wholesale CCIV||Registered MIS||Unregistered MIS|
|Registration with ASIC||Yes||Yes||Yes||No|
|Separate legal entity||Yes||Yes||No||No|
|Operator—company type||Public company||Public company||Public company||No requirement|
|Operator—AFSL requirement||Yes||Yes||Yes||Yes, subject to exemptions|
|Compliance plan and compliance plan auditor||Yes||No||Yes||No|
The use of a corporate vehicle will have benefits, particularly the familiarity for overseas investors and certainty under the tax rules of a CCIV having flow-through tax treatment. However, in our original submission to Treasury when the previous draft legislation was published, we noted there was an opportunity for even greater flexibility, particularly for wholesale fund managers. Our submission noted the following:
Fund managers need to understand how CCIVs will be used plus the regulatory and policy requirements of the new framework.
Our lawyers can answer your questions about the CCIV regime and help you commence planning. Please contact us if you need assistance with preparing a CCIV product.