AUSTRALIA
Distributions by managed investment trusts to foreign investors are generally subject to concessional withholding tax rates.
The investment manager regime (IMR) ensures that certain investment income and gains of qualifying widely-held foreign funds that operate through an Australian financial intermediary are tax exempt. The exemptions are extended to foreign beneficiaries and partners of IMR foreign funds.
Disposals of non-land Australian assets by non-residents are not subject to CGT. ‘Land’ includes interests in entities principally deriving their value from land, where a non-portfolio (greater than 10%) interest is held.
4.2 What are the applicable corporate tax rates? 30%
4.3 Does the government have any FDI tax incentive schemes in place? Immediate deductions are available for expenditure on mining and petroleum exploration, or income-producing activity with environmental protection as its sole or dominant purpose.
A deduction is available for investment in forestry managed investment schemes.
6. Legal and regulatory framework
Concessions and averaging offsets are available to primary producers, levelling the tax liability resulting from fluctuating yearly incomes.
Research and development expenditure, and investment in Australian films and television, attract tax offsets.
Interest withholding tax is not payable on loans from offshore banking units.
4.4 Other than through the tax system, does the government provide any other financial support to FDI investors? The Government primarily encourages FDI through the establishment of Austrade (see answer to 1.3). Some state and territory governments encourage FDI through state agreements, which historically were directed at facilitating project approvals rather than financial assistance. Although less common now, it is worthwhile for investors to discuss these with relevant governments.
5 Operating locally
5.1 What is the most common governing law of contracts and local business language? Most contracts are governed by the law applying in the relevant Australian state or territory. The local business language is English.
5.2 Explain any local content or local participation requirements relevant to foreign investors. Nil.
6.1 Are there any other FDI-specific laws that foreign investors must be aware of? See answer to 3 above.
6.2 What challenges if any do investors find in getting certainty around local law and regulation? Generally speaking, Australian law is well understood and generally consistently applied through courts. Sophisticated, confidential legal advice is readily available.
7. Dispute resolution
7.1 How efficient are local courts’ enforcement and dispute resolution proceedings, and are there any procedural idiosyncrasies foreign investors must be aware of? Australia has both federal and state jurisdictions, with the appropriate forum dictated largely by the subject matter of the dispute. In each jurisdiction, the relevant case management rules ensure that cases run as efficiently as possible. Superior courts in Australia publish statistics in relation to efficiency and performance standards. For example, the Federal Court of Australia completes 92% of cases within 18 months.
A judgment creditor is generally able to enforce a judgment through a range of statutory procedures, including the seizure and sale of assets. A judgment debt may also form the basis of a statutory demand under the Corporations Act which, if unpaid, may allow insolvency proceedings to be brought against a corporate debtor.
7.2 Do the courts of the FDI jurisdiction respect foreign judgments and are arbitration awards enforceable in the jurisdiction? Australia is a signatory to the United Nations Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) and the Model Law on International Commercial Arbitration adopted by the UN Commission on International Trade Law (UNCITRAL Model Law).
International arbitration awards made in a foreign jurisdiction are enforceable at the federal level in accordance with the provisions of the International Arbitration Act 1974 (Cth), while domestic arbitration awards
20 IFLR REPORT | FOREIGN DIRECT INVESTMENT 2014
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5.3 How difficult is it for foreign investors to secure expatriate visas for shareholder representatives and workers? Non-Australian residents can apply to the Department of Immigration and Border Protection (Department) for a subclass 457 visa. This visa enables a person to work in Australia for up to four years and must be paid at least the minimum entitlements that an equivalent Australian worker would receive for performing the same role. Companies seeking to utilise this visa must satisfy the Department that there is a lack of suitably qualified workers within Australia to perform the role.
5.4 What foreign currency or exchange restrictions should foreign investors be aware of? Anti-money laundering and counter-terrorism legislation regulate currency and exchange transactions, particularly in the financial and banking services sectors.
5.5 Does the country prohibit domestic companies from doing business in any foreign jurisdictions? Counter-terrorism legislation restricts Australian companies from providing domestic currency to certain entities associated with terrorism or jurisdictions subject to trade sanctions.
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