- Home
- Moore Tax News
- Managed Investment Trusts - Have you completed the MIT capital account election form yet?
Managed Investment Trusts - Have you completed the MIT capital account election form yet?
- By Stephen O’Flynn
- Published 25/08/2010
- Moore Tax News
- Unrated
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.
Overview
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 a MIT:
These rules apply to CGT events that happen on or after the start of the 2008/2009 income year.
Capital account election form
The ATO has now released the ‘Managed Investment Trusts election for capital treatment form’: http://www.ato.gov.au/content/downloads/SMEn73523-06-2010.pdf
Due date
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:
Contact us
Should you have any queries or require any assistance, please contact your Moore Stephens relationship partner.
Author: Stephen O’Flynn, Director, Taxation and Colleen Dillon, Senior Tax Manager; Moore Stephens.
Contact
Stephen O'Flynn
T +61 3 8635 1986
soflynn@moorestephens.com.au
www.moorestephens.com.au
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.
Overview
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 a MIT:
- shares;
- units;
- 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.
Capital account election form
The ATO has now released the ‘Managed Investment Trusts election for capital treatment form’: http://www.ato.gov.au/content/downloads/SMEn73523-06-2010.pdf
Due date
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 capital losses);
- eligible assets are generally acquired and disposed of within 12 months (therefore the trust is unable to use the CGT discount).
Contact us
Should you have any queries or require any assistance, please contact your Moore Stephens relationship partner.
Author: Stephen O’Flynn, Director, Taxation and Colleen Dillon, Senior Tax Manager; Moore Stephens.
Contact
Stephen O'Flynn
T +61 3 8635 1986
soflynn@moorestephens.com.au
www.moorestephens.com.au
Spread The Word
