The Federal Government has proposed amendments that will
allow foreign pension and sovereign wealth funds to access the
Managed Investment Trust (MIT) withholding tax regime.
In summary, the proposed bill provides foreign pension funds,
who invest in Australian managed investment schemes, with access to
the reduced rate of withholding tax under the MIT withholding tax
regime. The regime allows a MIT to make payments to non-residents
at concessional withholding tax rates, offering an attractive
Australian investment option for foreign funds where they and their
members are ultimately based overseas.
The amendments under the Bill are proposed to have retrospective
effect and will apply to all fund payments made on or after 1 July
FOREIGN PENSION FUNDS ELIGIBLE FOR MIT WITHOLDING TAX
Previously, payments made by MITs to foreign pension funds were
subjected to higher marginal tax rates because the funds did not
fall into the statutory definition of an eligible beneficiary under
the MIT withholding tax regime. The amendment proposes to amend the
definition to include foreign pension funds.
Not all foreign pension funds will be eligible for the MIT
withholding tax regime. Under the amendment, a foreign pension fund
will only have access to the regime if the entity:
is a pension fund established by an exempt foreign government
is a pension fund established under a foreign law for an exempt
foreign government agency; or
is a foreign superannuation fund that has at least 50
AMENDMENT IS RETROSPECTIVE
The amendments under the Bill are intended to apply
retrospectively to any fund payment made by an Australian MIT on or
after 1 July 2008. This means that eligible foreign pension funds
will be entitled to make an application to the Commissioner of
Taxation to have a tax assessment amended and assessed under the
MIT withholding tax regime.
The Bill has currently been referred to the Senate Economics
Legislation Committee for consideration and it is expected that the
committee will release a report by 25 November 2014. If you have
any questions regarding the Bill or the proposed amendments to the
MIT withholding tax regime as it applies to foreign pension funds,
please contact a member of our team listed in this publication.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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