The Corporate Collective Investment Vehicle Framework and Other Measures Bill 2021 (Cth) (CCIV Bill) received Royal Assent on 22 February 2022. The CCIV Bill sets out the regulatory and tax framework for a new type of investment entity, referred to as a corporate collective investment vehicle (CCIV). The CCIV regime commences from 1 July 2022.
CCIVs will have the legal form of a company limited by shares.
As a type of company, a CCIV has the legal capacity and powers of a company, which is treated as a separate person for legal purposes.
A CCIV must be operated by a single corporate director and, very broadly, must not have any other officers or employees.
A CCIV is an umbrella vehicle that comprises one or more ‘subfunds’, each of which is comparable to a separate unit trust. While each subfund does not have separate legal personality, its assets and liabilities would be separated from the assets and liabilities of other subfunds.
CCIVs may be entitled to flow-through treatment from an Australian income tax perspective. This is a characteristic that was previously only available to certain types of partnerships and trusts.
Tax flow-through treatment is, very broadly, where the investors in the CCIV are taxed on their proportionate share of the taxable income of the subfund in which they have invested (see below), and not the CCIV itself. This can be particularly important for certain types of transactions, such as project finance transactions where such treatment generally results in a higher amount of debt financing due to there being more cash flow being available to service debt.
Australian income tax flow-through treatment is achieved by the deeming of each subfund as a separate unit trust for Australian income tax purposes, with the CCIV as the notional trustee of each subfund and members of the subfund as beneficiaries. Very broadly, provided that the Attribution Managed Investment trust (AMIT) rules are satisfied in respect of the relevant CCIV subfund ‘trust’, the subfund should be treated as an AMIT (with certain modifications), such that the taxation of each subfund would broadly be aligned with those existing rules.
CCIVs are likely to be welcomed by many foreign investors. In particular, this is because many jurisdictions around the world do not have trust regimes or do not widely use their trust regimes. Consequently, investors from such jurisdictions often face significant challenges in investing in Australian trusts because they are an unfamiliar investment vehicle and their legal and tax regimes may not easily cater for such investments.
In line with policy intent, the CCIV regime is expected to increase the competiveness of Australia’s managed investment trust industry and attract offshore investment into Australia.
For more information about the CCIV regime and how the opportunities it presents for your business, please contact Matthew Shanahan on +61 2 9392 7475 or Matthew.Shanahan@jws.com.au.
Be the first to receive the latest articles, news and publications.
Partners Austin Bell and Matthew Shanahan have written the Australian chapter for the International Comparative Legal Guide: Public Investment Funds 2022.
Central to the Australian taxation system is the concept of self-assessment. Voluntary compliance for the payment of tax related liabilities is strong with Australian Tax Office (ATO) data...
Moshinsky J handed down (in part) the highly anticipated decision: Commissioner of Taxation v Pricewaterhouse Coopers  FCA 278, finding that only a portion of the respondent’s documents over...