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- Hidden traps in new MIT provisions announced in 08 Federal Budget
Hidden traps in new MIT provisions announced in 08 Federal Budget
- By Joel Lentin
- Published 24/09/2008
- Latest News
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A leading international tax practitioner today claimed the new Managed Investment Trust (MIT) provisions in last week’s Federal Budget had hidden traps for the unwary.
Mr Daren Yeoh, International Tax Partner with leading accounting and business advisory firm, Moore Stephens in Melbourne, said the Government announced in last week’s Federal Budget reductions in the rate of withholding on certain payments made by MITs progressively from 30 per cent to 7.5 per cent. In addition, apart from the 2008/2009 income year, the non-final withholding will be changed to a final withholding.
“While the reduced rate will make Australian REITs more globally competitive, certain non-residents may be
negatively affected,” Mr Yeoh said. “Investors who geared their investments in an MIT will now not be able to
benefit from the interest deductions. In addition, any tax losses or capital losses carried forward by non-residents cannot be used to reduce the withholding tax on the taxable income and capital gains distributed by the MIT,” he added.
“The proposed rules also place onerous notice requirements on multiple parties in the distribution chain,” Mr Yeoh said. “This is likely to increase the compliance costs of Australian entities that receive the distributions for the benefit of non-residents.”
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About Moore Stephens
Moore Stephens is a leading national network of six independent firms of business advisors and chartered
accountants in all mainland capital cities of Australia. All Moore Stephens firms are long-standing members of
their local business communities and specialise in providing highly personalised, expert and commercially astute audit, accounting and advisory services to their clients.
All member firms are also independent members of Moore Stephens International Limited, a global network of 358 independent member firms with 621 offices in 95 countries and annual fees revenue of more than US$1.8 billion.
For Further information:
Joel Lentin, Chief Operating Officer, Moore Stephens Australia
Phone: (03) 8635 1900 Mobile: 0412 105 945 email: jlentin@moorestephens.com.au
Mr Daren Yeoh, International Tax Partner with leading accounting and business advisory firm, Moore Stephens in Melbourne, said the Government announced in last week’s Federal Budget reductions in the rate of withholding on certain payments made by MITs progressively from 30 per cent to 7.5 per cent. In addition, apart from the 2008/2009 income year, the non-final withholding will be changed to a final withholding.
“While the reduced rate will make Australian REITs more globally competitive, certain non-residents may be
negatively affected,” Mr Yeoh said. “Investors who geared their investments in an MIT will now not be able to
benefit from the interest deductions. In addition, any tax losses or capital losses carried forward by non-residents cannot be used to reduce the withholding tax on the taxable income and capital gains distributed by the MIT,” he added.
“The proposed rules also place onerous notice requirements on multiple parties in the distribution chain,” Mr Yeoh said. “This is likely to increase the compliance costs of Australian entities that receive the distributions for the benefit of non-residents.”
- ends -
About Moore Stephens
Moore Stephens is a leading national network of six independent firms of business advisors and chartered
accountants in all mainland capital cities of Australia. All Moore Stephens firms are long-standing members of
their local business communities and specialise in providing highly personalised, expert and commercially astute audit, accounting and advisory services to their clients.
All member firms are also independent members of Moore Stephens International Limited, a global network of 358 independent member firms with 621 offices in 95 countries and annual fees revenue of more than US$1.8 billion.
For Further information:
Joel Lentin, Chief Operating Officer, Moore Stephens Australia
Phone: (03) 8635 1900 Mobile: 0412 105 945 email: jlentin@moorestephens.com.au