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The Finance Ministry has announced a significant tax exemption for Foreign Institutional Investors (FIIs) and the Bank for International Settlements (BIS) regarding investments in Government Securities (G-Secs), according to official sources.

The new measure provides relief from taxation on both capital gains and interest income derived from G-Sec investments. This targeted fiscal policy aims to encourage investment and participation from these key international financial institutions in the Australian government bond market.

Government Securities, or G-Secs, are debt instruments issued by the Australian government to finance its operations. They are considered relatively low-risk investments and play a crucial role in the country's financial system. The involvement of FIIs and BIS in the G-Sec market can contribute to market stability and liquidity.

While the specifics of the ordinance are still being disseminated, the Ministry’s clarification confirms the exemption applies to both capital gains—profits made from selling G-Secs at a higher price than purchased—and interest income—the regular payments received for holding the bonds. The rationale behind the exemption is to align Australia’s tax policies with international standards and attract further foreign investment.

The move is expected to be welcomed by the financial sector, though further details on the implementation and potential impact on government revenue are anticipated in the coming days. Official sources have indicated ongoing monitoring of the policy’s effects.