Time is running out! The MIT capital account election form needs
to be completed by 2 September 2010. If a MIT is
eligible to make an election, but has not done so by the relevant
date, any gains or losses on the disposal of eligible assets will
be treated on revenue account.
How Moore Stephens can help
We can help you analyse, document and determine whether the
trust is eligible to make the capital account election and
subsequent lodgement of the elections.
The managed investment trust ("MIT") capital account
treatment rules in Division 275 of the Income Tax Assessment
Act 1997 ("ITAA 1997") allow the trustee of an
eligible MIT to make an irrevocable election to apply only the
capital gains tax ("CGT") provisions for the taxation of
gains and losses on disposal of eligible assets.
Where the capital account treatment election is made by an
eligible MIT, the CGT provisions should apply as the primary code
to the gains and losses in relation to the following assets held by
real property; and
right or option to acquire any of the above.
These rules apply to CGT events that happen on or after the
start of the 2008/2009 income year.
In the MIT's trust tax return within the first income year
it became a MIT.
Election applies to
CGT events that happen on or after 1 July 2008 and subsequent
years in which the trust qualifies as a MIT.
CGT events that happen on or after the start of the income year
in which the trust first qualified as a MIT and subsequent years in
which the trust qualifies as a MIT.
Consequences of not making the capital account election
If a MIT is eligible to make an election, but has not done so by
the relevant date, any gains or losses on the disposal of eligible
assets will be treated on revenue account. This rule does not apply
to land, an interest in land, or an option to acquire or dispose of
such an asset. The characterisation of any gains or losses in these
circumstances will depend on general tax law principles.
The MIT may choose not to elect into the capital account
treatment for various reasons:
the capital loss on eligible assets would not be able to offset
against revenue gains on related or other financial arrangements
(thus there is a preference to crystallise revenue instead of
eligible assets are generally acquired and disposed of within
12 months (therefore the trust is unable to use the CGT
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.
CIVs will have flow-through status for tax purposes and similar criteria as the MITs, to encourage foreign investment.
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