Treasury advice on corporate collective investment vehicles



On August 27, 2021, the Australian Government’s Treasury Department (Treasury) has issued a set of documents comprising an Exposure Draft on Legislation and an Exposure Draft Explanatory Memorandum for Industry Comments on the Regulatory and Tax Components of the Corporate Mutual Fund (CCIV) diet (see here for relevant materials). The Treasury has proposed that a commercially viable form of the CCIV scheme be in place as of July 1, 2022.

In the 2016-2017 federal budget, the government announced that it would introduce regulatory and tax frameworks for two new types of collective investment vehicles, namely a CCIV and a limited partnership collective investment vehicle. Since then, the Treasury has overseen a number of periods of consultation and revisions of the CCIV regime. Johnson Winter & Slattery previously published an article outlining the main features of the CCIV diet during industry consultations in September 2017, which can be accessed. here.


CCIVs must be structured as an umbrella vehicle or an umbrella fund incorporating one or more compartments. A CCIV is a public limited company, most of its powers, rights, duties and legal characteristics are in accordance with those of a natural or legal person. A compartment, on the other hand, will not have legal personality.

CCIVs constitute an alternative vehicle to that of managed UCITS (MIS) with closer alignment with European-type corporate funds (under the European Undertakings for Collective Investment in Transferable Securities (UCITS) Directive). The latter is a popular vehicle in parts of Asia.

It is also proposed that when CCIVs are considered attribution managed investment funds (AMIT) under section 276 of the Income Tax Assessment Act, 1997 (Cth) (Law of 1997), they will be taxed as AMITs. Otherwise, the general provisions relating to the taxation of trusts will apply to CCIV and, in both cases, each sub-fund will be treated as a separate trust for tax purposes.

Regulatory framework

What is a CCIV?

A CCIV is a company limited by shares and the sole director of which is a public company holding an Australian Financial Services License (AFSL) with the appropriate authorizations to operate a CCIV. A CCIV must have a constitution and at least one compartment which has at least one member.

Like the MIS regime, CCIVs can be retail or wholesale, with a more comprehensive regulatory regime applying to retail CCIVs to protect retail investors. However, unlike the MIS scheme, all CCIVs must be registered as a company with the Australian Securities and Investments Commission.

A CCIV cannot transform into another type of company and another type of company cannot transform into a CCIV.

What is a compartment of a CCIV?

A compartment is the vehicle through which the business and operations of the CCIV are to be conducted. When registering CCIV, at least one sub-fund must be established and be identifiable by a unique name and Australian registered fund number (ARFN). Registration of additional compartments after CCIV registration is a separate process.

The securities issued by the CCIV must be attached to a sub-fund. The assets and liabilities of the CCIV must be allocated to a specific compartment. If necessary, the director of the company should convert a single asset that would otherwise be distributed among several compartments into cash or some other form of fungible property to allow separate attribution of the property. Any award made by the director of the company must be “fair and reasonable in the circumstances”. The assets of the CCIV (and each sub-fund) may be held by the CCIV or by another person (such as a custodian) in trust for the CCIV.

What is a corporate director of a CCIV?

The Director General of the CCIV is responsible for the operation and affairs of the CCIV. These functions are attributed to the executive corporate officer by the constitution of the CCIV and the Companies Act 2001 (Cth) (Corporations Act). Since the CCIV itself has no officers or employees who are natural persons, the corporate director is responsible for the conduct of the CCIV. The Law on legal persons imposes a series of statutory obligations incumbent on the director of companies in his capacity as director of the CCIV and on the members of the CCIV.

As indicated above, the company director is required to hold an AFSL with a new type of authorization for the provision of the financial service of “operation and conduct of the affairs of a CCIV”. While a CCIV is expected to provide more than one type of financial service during its operations, the Treasury anticipates that a CCIV will generally provide the financial service of “negotiating a financial product”.

What is a member of a CCIV?

An entity will be a member of a CCIV if it holds one or more shares of the CCIV. As indicated above, each share must be attached to a sub-fund. Each share will have certain rights and obligations. These include in particular voting rights, rights to dividends and distributions of CCIV capital under a sub-fund.

What are the requirements for securities issued by a CCIV?

A CCIV may issue both shares and bonds on the basis that any security issued relates to a single compartment of the CCIV. Subject to its constitution, a CCIV may also buy back redeemable shares, pay dividends to members or reduce the share capital if the sub-fund to which the redeemable shares, dividends or capital relate is solvent immediately before the operation and if the The transaction would not result in the sub-fund becoming insolvent immediately after its closure.

Although they are a form of company, CCIVs are not subject to the disclosure obligations set out in Chapter 6D of the Law on legal persons. Rather, CCIVs must adhere to the product disclosure statement (PDS) disclosure regime contained in Part 7.9 of the Corporations Act as amended by amendments proposed by the Consolidated Revenue Fund. Therefore, CCIVs are required to provide a PDS to retail clients who wish to acquire its securities. This means that retail CCIVs will also be subject to design and distribution obligations under Part 7.8A of the Corporations Act.

Main proposed changes

This section highlights the main changes to the CCIV regime proposed by the Treasury during this last round of consultation.

Depositary requirements

A custodian is a separate company appointed by the CCIV that holds its assets in trust and whose functions include overseeing certain operational activities of the CCIV The Treasury has removed the requirement for retail CCIVs to have an independent custodian on the bank. basis that there should be sufficient flexibility to allow alignment of business models with particular markets and investors as needed.

Cross investment

Cross-investment refers to the practice of a compartment of a CCIV holding one or more shares which are attached to another compartment of the same CCIV. Cross-investing could be used to achieve managerial and operational efficiencies, as well as to enable the possibility of establishing fund-of-fund structures in a single CCIV.

The Treasury declares that cross-investments will allow CCIVs to use fund management structures such as:

  • master-feeder building blocks / structures, which involve the creation of multiple compartments that hold particular asset classes (building block compartments) and other compartments that have different levels of exposure to those building block compartments ; and
  • hedging structures, which involve the creation of a compartment which holds the basic assets of the CCIV and additional compartments which hold shares and hedging instruments in the basic compartment.

Listing on the prescribed financial markets in Australia

The Treasury proposes that retail CCIVs with one compartment can now be included in the official list of a prescribed financial market operating in Australia from July 1, 2022. However, wholesale CCIVs and retail CCIVs with multiple compartments remain. banned from listing in Australia. These prohibitions do not affect the ability of a CCIV to list a security on a financial market such as the ASX Quoted Assets Market, subject to the financial market’s own rules.

Fiscal framework

While the regulatory framework is designed to provide certainty as to the legal status and operation of CCIVs and compartments, the tax framework aims to ensure that members can obtain the attribution and transfer of income and tax treatment. on the income of a CCIV through either the current AMIT regime or the default trust tax regime in section 6 of part III of the Income Tax Assessment Act 1936 (Cth) (Section 6).

The Treasury explained that despite its registration as a company under the Companies Act, the principles of presumption in proposed subsection 195-C of the 1997 Act will have the effect of considering that there is a relationship trust between the CCIV, the company, the assets and commitments of a compartment and its members for the purposes of applying tax laws. This deeming provision will have the following consequences:

  • the assets, liabilities and business relating to a specific sub-fund will be treated as a separate trust;
  • the CCIV will be considered as the trustee of each compartment which will be considered as a separate mutual fund known as the CCIV compartment trust; and
  • CCIV members will be considered as beneficiaries of the CCIV compartment trust fund.

In addition, each sub-fund of a CCIV will be treated as a separate trust for tax purposes with the relevant tax laws that apply to trustees, trusts and beneficiaries applying to the CCIV.

Subject to meeting the AMIT eligibility criteria for a CCIV compartment, a CCIV compartment may allocate amounts of taxable income, exempt income, non-exempt non-taxable income and tax compensation received. or perceived by the CCIV which have a particular character to the members. These amounts will retain their character and will then be taxed as such in the hands of the members as if the member were directly drawing such amounts.

Unlike managed investment funds qualified as AMIT which may choose to be taxed as AMIT, CCIV sub-funds qualified as AMIT will be compulsorily taxed as AMIT. The CCIV compartments will have no choice.

In cases where a CCIV does not meet the eligibility criteria for the AMIT regime in connection with a specific sub-fund for a particular tax year, the tax treatment will by default be that of the general tax framework for trusts in section 6. .

Johnson Winter & Slattery intends to prepare a new tax analysis of the proposed CCIV model in the coming weeks.


Submissions on this public consultation can be made until September 24, 2021. Please contact us if you would like more information on the regulatory or tax implications of the proposed CCIV regime.



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