The Tax-Free Isa allows investors to buy shares in an Australian company at a discounted rate and pay tax on any profit it makes.
It is a controversial concept, with critics saying it’s a tax grab by the government and a drain on small business tax coffers.
Tax-haven status means investors get a tax deduction on their investment, unlike a “normal” investment like a property or share.
The Government has been criticised for not taxing tax-haven investment, and its latest tax reforms are expected to result in an increase in Isa sales.
It has not been confirmed if the Government will introduce a tax-free plan for Isa sales this year.
“This will result in a huge increase in investment opportunities, especially for those in Australia and overseas,” Mr Morrison said.
“Investors are going to get a real benefit out of it, and we’re confident that the Government is going to deliver on that.”
Investors with existing Isa plans will be able to transfer their Isa into the new system, as long as they have an existing Australian company with a minimum investment of $2 million.
They can also transfer into the Isa plan without any additional fees.
“As an investor with a limited income, the plan is not suitable for you,” the Government’s statement said.
The announcement follows the release of the tax year 2016-17 annual report by the Department of Finance.
The report shows that the tax on Isa investments has grown to almost $1.2 billion in 2017-18, an increase of more than 30 per cent.
In the previous financial year, the tax was about $764 million.
“The Government has invested more than $2 billion of taxpayers’ money in the Isa over the past year,” Mr Morneau said.
A Treasury spokesperson said the Government had invested $1 billion in the fund this year, but would continue to invest in the plan in the next financial year.
A spokesperson for the Australian Council of Financial Services (ACFS) said the move was a welcome move.
“It’s great news for those investors who have already invested in the scheme and are hoping to move into a tax free Isa, particularly for those with existing investments,” a spokesperson said.
But the ACFS said there were other measures the Government could take to support those who are already on a tax paid Isa.
“We think the most important thing the Government can do is make sure that those who already have a tax paying Isa have the best possible opportunity to buy into the fund,” a spokeswoman said.
Topics: tax, community-and-society, australia