Funds hopeful on tax report

By ELLEN READ

Champagne corks are poised to pop across the investment industry tomorrow if, as widely hoped, a report to the Government recommends an end to capital gains tax on active managed funds.

Finance Minister Michael Cullen will release a report from former BT Funds Management chief executive Craig Stobo - "Toward Consensus on the Taxation of Investment Income".

Industry hopes are high that Stobo will recommend ditching the 33 per cent tax on profits from active managed funds. "Basically, if they remove capital gains tax from managed funds then their returns could be the equivalent of 33 per cent higher," said Tim Anderson, business manager for fund researchers FundSource said.

He added the industry was "quietly confident" Cullen would take up such a proposal.

Elsewhere in the market this week, Australasian insurer and fund manager Tower opens its books on Wednesday.

The listed Australasian financial services group is in the throes of a turnaround.

A shock profit warning two years ago saw the group's share price plummet.

Since then, the company has rebuilt via capital raising, slashing expenses, culling several directors and senior managers, selling a business, shutting others, and overhauling the structure of its divisions.

The half-year profit of $20.5 million announced in March compared with a loss of $154.4 million for the previous corresponding period.

The stock exchange PR machine will be in full flight this week as a nationwide roadshow kicks off the new FONZ index-tracking fund.