The government has established it is looking towards a number of reforms to boost the efficiency and competition of financial markets, signalling that it has an aim to roll out the red carpet for global financial services firms into Australia.
As outlined in the budget, the government is set to consult on licensing relief for foreign financial services providers. Companies that are licensed in jurisdictions with comparable financial service rules and obligations or have limited connection to Australia, could be relieved from needing to hold an Australian Financial Services Licence (AFSL).
The measure, limited to providers that deal with wholesale clients and professional investors, is looking to cut down on duplicate regulatory requirements.
The government has also indicated that it will consult on options to create a fast-track licensing process for financial services providers that wish to establish more permanent operations in Australia.
Such a move could see shortened application time frames and reduced barriers to entering the Australian market.
The government has also drawn on attracting talent through employment share scheme changes, that are designed to make it easier for companies to offer shares to their employees.
The taxation point on shares when an employee leaves a company has been removed, with a maximum deferral period of 15 years.
The budget has also outlined other regulatory changes for employee share schemes, such as removing disclosure requirements, exempting the offer from licensing, anti-hawking and advertising prohibitions where companies don’t lend or charge the workers.
The ATO is also set to introduce a new early engagement service from July, to encourage and support new business investments into Australia.
The Tax Office’s mandate is to provide “up front” confidence to investors about how Australian tax laws will apply among other measures, including support around federal tax obligations. It is also supposed to integrate with the Foreign Investment Review Board (FIRB) on certain transactions, so that investors only need to provide information on tax aspects once.
The ATO will consult with industry stakeholders on the service until June.
Globally mobile individuals and their employers have also been given a new simplified framework for tax residency, defined as a “bright line” test. A person who is physically present in Australia for 183 days or more in any income year will be considered an Australian tax resident.
Further, the government is continuing on its previous moves to clarify the corporate residency test, to address uncertainty for foreign incorporated entities.
The budget has also indicated an incoming financial market infrastructures (FMIs) regulatory reform package, which is aiming to provide Australian regulators with sufficient power to pre-emptively identify and manage risks or intervene in an FMI failure crisis.
ASIC and the Reserve Bank of Australia will both see their supervisory and licensing powers boosted.
The package will also allow the Reserve Bank to manage a failure at a clearing and settlement facility. The RBA would be able to draw up to $5 billion per event as a last resort measure to ensure the continued operation of clearing and settlement facilities.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
