Australian fund managers welcomed the much anticipated announcement that the Government will introduce an exclusive taxation regime that will apply to the taxation of trusts that qualify as Managed Investment Trusts (“MIT”). It is expected that the New MIT regime will remove the longstanding uncertainty in the interaction of Australian tax and trust law in the area of MITs.

This announcement was made by Assistant Treasurer Senator Nick Sherry which closely follows the recent proposed amendments that will refine and expand the definition of a MIT for both capital account treatment (for CGT purposes) and the fund payment withholding tax rules.

This long awaited announcement follows 18 months of speculation around the possible introduction of such a regime following the release of a Board of Taxation discussion paper - Review of the Tax Arrangements applying to Managed Investment Trusts, which contained 48 recommendations to Government. In establishing the new MIT tax regime, the Government is accepting 38 of these 48 recommendations.

The key features of the new MIT tax regime are:

• the provision of an elective "attribution" system of taxation to replace the present entitlement system - this new attribution system will provide that investors will be taxed only on the income that the trustee allocates to them on a fair and reasonable basis;
• establishing the ability to deal with "over or under" distributions within a five per cent cap;
• removing double taxation; and
• abolishing Division 6B of the Income Tax Assessment Act 1936 which relates to corporate unit trusts and which the Tax Board found redundant.

The Government will shortly commence industry consultation on the proposed measures.  This will undoubtedly include an exposure draft of the new law, as always the devil will be in the detail. 

Stay tuned for more updates, as Moore Stephens will be providing further analysis of the proposed MIT regime and how it affects you.

When further details are released Moore Stephens will be holding MIT Tax Regime session. This session will provide an in-depth analysis of the New MIT Regime and is essential for anyone that is involved in the property funds management industry to understand the impact of these changes on their business.   

Should you have any further queries please contact your Moore Stephens relationship partner.


Click here to register your interest for the Melbourne MIT Tax Regime Session
Click here to register your interest for the Sydney MIT Tax Regime Session


Author: Stephen O’Flynn and Simon Tucker