The government has announced some streamlining and a number of technical amendments designed to improve and clarify the operation of the Managed Investment Trust regime.
The Tax Laws Amendment (New Tax System for Managed Investment Trusts) Bill 2015 and associated Bills introduce a new tax system for managed investment trusts with effect from 1 July 2016.
Eligible trustees can also make an irrevocable choice to have the new tax system take effect from the earlier date of 1 July 2015.
The changes to extend the list of entities qualifying as eligible investors for the purpose of the widely held requirements apply on or after 1 July 2014.
The changes now being introduced were first foreshadowed by the former government in the then Assistant Treasurer’s Media Release of 7 May 2010 – a response to a report by the Board of Taxation’s on the taxation of Managed Investment Trusts.
The broad purpose of the new system is to remove complexity from the taxation of large, or widely held trusts from the trust provisions of the Tax Act which were designed at a time before large commercial trusts were commonly used.
Features of the new rules include:
- Managed Investment Trusts to be treated as fixed trusts
- adoption of an ‘attribution model’ of taxation, simplifying the character flow-through treatment of income and tax credits, and reducing potential double taxation from cost-base calculations
- an ‘unders and overs’ regime to allow (optionally) variances of trust income to be adjusted in the income year in which the variance is discovered without the need for amending income tax returns of either the trust or its members
- PWC TaxTalk Alert – Legislation to implement the new Managed Investment Trust Regime introduced into Parliament (4 December 2015)
- The Bill – Explanatory Memorandum (3 December 2015)
- King & Wood Mallesons – Finally! Bill for the proposed Attribution Managed Investment Trust (AMIT) reforms introduced into Parliament (3 December 2015)
- Lexology – Proposed tax changes to Managed Investment trusts (15 September 2015)
- ATO – New taxation system for managed investment trusts
ATO – Law Companion Guidelines – Managed Investment Trusts
- Attribution Managed Investment Trusts: ‘clearly defined rights’
- Attribution Managed Investment Trusts: choice to treat separate classes as separate AMITs
- Attribution Managed Investment Trusts: character flow through for AMITs
- Attribution Managed Investment Trusts: attribution on a ‘fair and reasonable’ basis
- Attribution Managed Investment Trusts: the rules for working out trust components – allocation of deductions
- Attribution Managed Investment Trusts: trustee shortfall taxation – section 276–420
- Attribution Managed Investment Trusts: administrative penalties for recklessness or intentional disregard of the tax law – section 288–115
- Attribution Managed Investment Trusts: annual cost base adjustments for units in an AMIT and associated transitional rules
- Attribution Managed Investment Trusts: dividend, interest and royalty withholding
- Attribution Managed Investment Trusts: withholding in respect of ‘fund payments’
- Managed Investment Trusts: widely-held tests – wholly-owned entity of an Australian government agency
- Managed Investment Trusts: the non-arm’s length income rule in sections 275-605, 275-610 and 275-615 of the Income Tax Assessment Act 1997
For a discussion of the position of widely-held trusts prior to the December 2015 Bill, see:
- Minter Ellison: Tax concessions for Australian Managed Investment Trusts (24 January 2013 )
This page was last modified on 19 Sept 2017