One of the tax measures in the mid-year economic and fiscal
outlook announced earlier this week by the Deputy Prime Minister
and Treasurer, the Hon Wayne Swan MP, is the further deferral of
the new Managed Investment Trust (MIT) regime to 1 July 2013 to
allow "more time for consultation with stakeholders about how
to best implement the elements of the package". This
does not seem to have received a lot of attention compared to the
furore over some of the other tax measures, such as the Fringe
Benefits Tax (FBT) reform for Living Away From Home Allowances
While we welcomed the announcement in April this year by the
Assistant Treasurer, the Hon Bill Shorten MP, to defer the start
date of the MIT regime from 1 July 2011 to 1 July 2012 to ensure
that the objective of increased certainty is realised, it is
disappointing that we are in a position that has required the
legislation to be deferred again. We acknowledge that the
deferral of the legislation is the best outcome at this point in
time as Treasury is having difficulty drafting legislation to take
into account the concerns of industry. However, the
further deferral of this regime does not support the
Government's aim of improving the international
competitiveness of the Australian funds management industry and its
commitment to making Australia the financial services hub of
One of the primary barriers for Australian fund managers in
attracting foreign investment has been the uncertainty of the
Australian tax legislation. While these concerns have been
addressed to some degree with the introduction of measures such as
the MIT capital account election, the further deferral of this
regime means that there is still an element of uncertainty in the
current Australian tax rules which may be sufficient for foreign
investors to look elsewhere.
By way of background, the key aspects of the new MIT tax system
An elective 'attribution' system of taxation to
replace the present entitlement system, so that investors are only
taxed on the income the trustee allocates to them on a fair and
reasonable basis, consistent with their entitlements under the
trust's constituent documents.
The establishment of a carry-over facility to deal with
'unders' and 'overs' within a 5% cap so
trustees are not required to reissue tax statements and investors
are not required to amend their income tax returns.
The removal of double taxation that may arise where the taxable
income of a MIT differs from the amount distributed to
The abolition of Division 6B of the Income Tax Assessment Act
1936, which relates to corporate unit trusts.
For further information, please contact the author or your Moore
Stephens relationship partner.
These are the top five issues that should be considered by asset-based lenders in the context of Australian transactions.
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