What is changing

• Minimum financial thresholds in the NTA requirement will be increased to reflect inflation between June 2013 and March 2026.
• Annual indexation will be introduced to ensure thresholds continue to reflect changes in value over time.
• The revised requirements will apply from 1 July 2027, including the first annual indexation adjustment.
• ASIC will amend ASIC Corporations (Financial Requirements for Responsible Entities, IDPS Operators and Corporate Directors of Retail CCIVs) Instrument 2023/647 and update Regulatory Guide 166 AFS Licensing: Financial requirements.
• The key NTA changes include:
  • $150,000 NTA minimum to $200,000
  • $150,000 minimum cash or cash equivalents requirement to $200,000
  • $500,000 NTA minimum to $700,000
  • $5m cap that applies to the average value of fund assets limb of the concessional NTA requirement to $7m
  • $10m NTA minimum under the non-concessional NTA requirement to $14m.

What isn’t changing

• There is no change to the NTA requirement for custody providers applying ASIC Corporations (Financial Requirements for Custodial or Depository Service Providers) Instrument 2023/648.

Other alternatives ASIC considered

Before confirming the CPI-based indexation approach, ASIC consulted on a broader range of alternatives for increasing the NTA requirement. These included increasing the $150,000 minimum under the concessional NTA requirement to a higher fixed amount of up to $1m, applying the $150,000 minimum on a per-scheme basis, and increasing the current $5m cap on the average value of fund assets limb of the concessional requirement.

Who is impacted

Why the change matters

ASIC’s stated objective is to restore the financial value of thresholds that have remained unchanged for more than a decade and support the broader purpose of the NTA requirement. The requirement is intended to align the operator’s interests with scheme members, ensure the operator can meet its operating costs, and provide resources that may assist in transitioning or winding up a scheme if the operator fails. ASIC has clarified that the NTA requirement is not designed to prevent business failure or fully compensate investors for loss from significant events.

Practical next steps

• Model the expected uplift in applicable NTA thresholds and determine whether additional capital will be required before 1 July 2027.
• Update NTA forecasts, board reporting packs, and financial resource monitoring procedures to incorporate annual indexation.
• Review whether the composition of assets continues to satisfy the cash, cash equivalent, and liquid asset components of the NTA requirement.
• Assess whether group funding, related party receivables, or support arrangements remain appropriate for regulatory capital purposes.
• Monitor ASIC’s amendments to Instrument 2023/647 and the forthcoming updates to RG 166.

How SW can help

SW brings deep financial services expertise with a strong focus on funds management, responsible entities, platform operators, and regulated investment structures. We work closely with clients to navigate financial resource requirements, licence obligations, and evolving ASIC expectations.

Our team can assist with assessing the impact of the confirmed NTA threshold increases, modelling capital requirements ahead of the 1 July 2027 commencement date, updating monitoring processes for annual indexation, and preparing Board and management reporting to support compliance readiness.

With integrated audit, assurance, risk, and advisory capabilities, we provide practical, commercially focused guidance to help fund operators respond effectively to ASIC’s revised financial resource settings.

Contributors

James Serpell | Associate Director, Assurance and Advisory Services

The post ASIC confirms indexation of the net tangible asset requirement appeared first on SW Accountants & Advisors.

The proposals respond to ongoing governance concerns and recent high-profile scheme collapses, most notably the Shield Master Fund and the First Guardian Master Fund. Together, they placed more than $1bn of investor funds at risk. The Australian government is considering reforms aimed at reducing consumer harm, strengthening responsible entity (RE) accountability, and improving Australian Securities & Investments Commission’s (ASIC) visibility over scheme activities, superannuation switching, and sector-wide risks. Treasury is seeking feedback on these proposals, with submissions due by 27 February 2026.

The paper sets out 6 consultation points for feedback from the industry

1. Strengthening the compliance framework

• Stricter compliance plan requirements, including detailed scheme descriptions and significant risk controls.
• Liability for compliance plan breaches limited to material contraventions.
• Mandatory use of existing audit and assurance standards for compliance plan audits.
• REs to notify ASIC of appointment or resignation of compliance committee members.

2. Majority of external directors on responsible entity boards

• RE boards would be required to have a majority of external directors, eliminating the alternative option of a mandatory compliance committee.

3. Prohibition on related‑party transactions (with limited exceptions)

• REs would be prohibited from investing in or lending to related entities unless an exception applies. This responds directly to identified misconduct in past MIS failures.
• A potential solution outlined would be to outsource the RE function such that it is independent of the investment manager.

4. New framework for financial resource requirements

• ASIC considering higher net tangible asset (NTA) requirements.
• Treasury is seeking feedback on whether these requirements should be set out in legislation rather than in ASIC instruments.

5. Increased ASIC MIS data collection powers

• New recurrent and event‑based data reporting to address current gaps in MIS‑level visibility.

6. Alerts to ASIC about superannuation switching

• Mandatory alerts from superannuation trustees regarding suspicious switching activity, aimed at early detection of misconduct.

Who is impacted

How SW can help

SW brings deep financial services expertise with a strong focus on funds management and regulated investment structures. We work closely with responsible entities, investment managers, and trustees to navigate complex regulatory change and evolving governance expectations.

Our team can assist in assessing the impact of the proposed reforms on your governance framework, board composition, compliance plans, and related party arrangements. We also advise on financial resource requirements, capital implications, and enhanced reporting obligations, helping you strengthen risk management and internal controls in line with heightened regulatory scrutiny.

With integrated audit, assurance, risk, and advisory capabilities, we provide practical, commercially focused guidance to help you respond effectively to these reforms.

Contributor

James Serpell

The post Enhancing safeguards & governance in the managed investment scheme sector appeared first on SW Accountants & Advisors.

The SW Property & Infrastructure team are at the forefront of key changes and impacts related to BTR and the proposed legislation. Our submission to Treasury will cover all the noteworthy intricacies that will have long term ramifications on the BTR sector as detailed below.

Legislation will not be backdated

It is disappointing that the legislation will not be back dated for the small number of BTR pioneers that commenced construction on projects before 9 May 2023. These projects will be subject to the 30% Managed Investment Trust (MIT) Withholding Tax rate (WTR) imposed on residential property which may leave these small number of assets stranded and as these properties will not have concessional BTR MIT WHT treatment they will be more difficult to sell.  

BTR projects are anticipated to be predominately funded by large offshore investors who already have exposure to this asset class internationally.

Key points

Who’s eligible?

BTR developments must meet the following eligibility criteria:

• The development’s construction commenced after 7.30pm on 9 May 2023. Unfortunately, the Government has stuck with the original start date for the legislation.
• The development consists of 50 or more residential dwellings made available for rent to the general public.
• The development continues to be owned by a single entity, at any one time, for at least 15 years. BTR developments can still be sold during the 15 year compliance period as long as the dwellings in the BTR development continue to be owned by a single entity. The 15 year period does not reset if the BTR development is sold to another entity.
• Dwellings must be offered for lease terms of at least 3 years (unless a shorter term is requested by the tenant)
• At least 10% of the dwellings in a BTR development must be offered as affordable dwellings throughout the 15 year compliance period.

Does this reduce ‘Red Tape’?

The Government’s promise of cutting red tape and planning hurdles to attract more institutional investment in the housing sector seems inconsistent with the legislation’s complexity. The new rules appear more difficult to satisfy than most of the State BTR land tax concessions (as indicated in the below analysis).

• The Government has imposed a requirement to include 10% affordable tenancies in BTR developments. 
• In an active BTR development, there will likely be different types of dwellings with different sizes, total floorspace and different amenities: number of bathrooms, number of bedrooms, etc.
• The owner of the BTR development must make at least one of each apartment or dwelling types available as an affordable dwelling, that is dwellings of comparable size and amenities.
• This is to prevent a BTR owner from allocating only the lowest standard dwellings in a development as affordable dwellings, that is the lowest total floorspace, least number of bedrooms, least number of bathrooms etc.  

Use of foreign capital now requires an affordable tenancy component

A number of the state land tax concessions do not require an affordable tenancies component. Therefore, this will now need to be factored into the rental profile of BTR developments in NSW, VIC and WA where they are looking to fund developments using foreign capital.

15 year compliance period

As the 15% MIT WHT rate is only available for 15 years, the concession is not very beneficial considering the long-term nature of BTR developments and is not consistent with the original announcement that did not mention any restriction on the period of the lower 15% MIT WHT rate. 

All other commercial property held by a MIT is broadly subject to a 15% MIT WHT rate during the duration of the asset holding period by the MIT so it unclear why such a restriction has been imposed on the BTR sector.

Comparison with State BTR regimes

The following table summarises the key features comparison of NSW, Queensland, Victorian and Western Australian BTR land tax concessions.  There are also BTR exemptions for South Australia, Tasmania and ACT.

Get in touch

Should you have any questions regarding the new BTR MIT legislation or would like to contribute to our submission on this issue please contact either Abi, Stephen or Matt.

The post Build to Rent investment legislation released, designed to ease Australia’s housing shortfall appeared first on SW Accountants & Advisors.

The central objective of this review is to evaluate the adequacy and relevance of the existing regulatory structure, pinpoint regulatory gaps, and explore improvements to mitigate unwarranted financial risk exposure for investors.

The review is part of the Government unveiled plans for Treasury to conduct a review of the regulatory framework governing MIS, in the October 2022‑23 Federal Budget.

Focus of the MIS review

The review will focus on the following current regulation areas:

• criteria of investor’s wholesale client status
• responsible entities’ roles and obligations.

The criteria establishing an investor’s wholesale client status

The criteria for a wholesale client is currently under review. Chapter 7 of the Corporations Act 2001 contains several tests in relation to specific products.

Current thresholds for establishing wholesale investor status include:

• where initial amount paid by investor at time of investment is at least $500,000 or
• a qualified accountant provides a certificate which states that the client’s
  • net assets are equal to or exceed $2,500,000 or
  • gross income for the last two financial years is at least $250,000 per annum.

Responsible entities’ roles and obligations

A key focus area of the review is the governance of the scheme. Effective governance demands ongoing vigilance for transparency and accountability.

Ensure you are aligned with current standards and practices within the Australian financial sector. It is crutial to adapt governance practices to match evolving regulations through consistent regulatory monitoring, and seek guidance from legal and regulatory specialists.

You can find the announcement detailing the primary issues under review here.

Make sure you’re ready

Each MIS provider should assess the impact on their business. The outcome of the consultation could alter the type of license needed to maintain current distribution.

MIS providers are advised to consider reviewing the consultation paper and their investor thresholds. Each case is different, we can provide expert advice that is right for your business.

How SW can help

The SW team has deep financial services sector experience, and specialises in funds management. We can provide you with the right guidance to assess the regulatory changes and their impact to your business.

Contributors:

Gail Makone

James Serpell

The post Managed Investment Scheme consultation underway  appeared first on SW Accountants & Advisors.