The Government introduced legislation into Parliament earlier
this week for the new Managed Investment Trust (MIT) definition
that will apply to both the capital account election reforms and
the withholding tax regime. The intention of the new definition is
to expand the application of the MIT regime to a wider range of
managed funds. Unfortunately, it has not fully achieved this
This new MIT definition contains four (4) core requirements and
different criteria for registered and unregistered Managed
Investment Schemes (MIS).
Most of the requirements contained in the Exposure Draft (ED)
legislation remain. As summarised in our Moore Tax News edition
entitled 'Managed Investment Trusts – a uniform
definition' that was circulated soon after the ED
legislation was released, they include:
Restriction on a foreign resident individual's
ownership of the fund to 10%;
Requirement for the fund to be a MIS as defined in the
Corporations Act 2001;
Expansion of the definition to include certain wholesale MIS,
Government controlled and owned entities;
Inclusion of certain MIS that are operated and managed by
entities not required to be financial services licensees;
Introduction of a rule to explicitly exclude closely held
Addition of pooled superannuation trusts with at least one
member that is a complying superannuation fund with at least 50
members to the list of specified widely held entities.
A major change from the ED was the inclusion of a requirement
that investment management activities are carried out in Australia.
This will be a major impediment for large foreign investors, such
as pension funds and sovereign funds, investing in Australia as
they would generally participate in investment management decision
Some of the additional requirements that have been introduced
into the MIT definition as a result of industry consultation
A reduced membership rule threshold for unregistered wholesale
A specific 'closely held' test for unregistered
wholesale MIS; and
A special look-through rule for determining the number of
members that can be attributed to holdings by superannuation funds
and other particular collective investment vehicles to determine
whether the wholesale fund is widely held.
Interestingly, whilst the look-though rule has been provided to
make it easier for unregistered MISs to satisfy the widely held
test the look-through rule has not been provided for registered
MISs. This seems an inequitable result as it will be more difficult
for registered wholesale funds to qualify as an MIT compared to
their unregistered cousins.
For the withholding tax rules, this new definition will have
effect from 1 July after receiving Royal Assent.
For the capital account election regime, this new definition
will have effect from the start of the 2008-09 income year. The
legislation containing this regime is currently awaiting Royal
Should you require any details, please contact your Moore
Stephens Relationship Partner.
An actuarial review of the Invensys Australia Superannuation Fund showed it to be in surplus to the tune of $189.2 million. In mid 2003, the Invensys Group proposed to the trustee that the surplus be repatriated to the principal employer in the group.
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