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The government has released draft legislation to cover a new tax system for managed investment trusts (MITs).
According to a Treasury statement, the proposed new tax system for MITs will modernise the tax rules for eligible trusts and increase certainty for both MITs and their investors.
“The new rules will enhance the international competitiveness of Australian managed funds and promote the greater export of Australia’s funds management expertise,” the statement read.
Key features of the new tax system for eligible MITs include:
• an attribution model for determining member tax liabilities, which allows amounts to retain their tax character as they flow through a MIT to its members;
• the ability to carry forward understatements and overstatements of taxable income, instead of re-issuing investor statements;
• deemed fixed trust treatment under the income tax law;
• upwards cost base adjustments to address double taxation; and
• legislative certainty about the treatment of tax deferred distributions.
Interested parties are invited to comment on the draft legislation and draft explanatory memorandum.
The closing date for submissions is 23 April 2015.
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