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  • AMIT technical amendments

    The Government has passed legislative amendments to ensure that the new tax system for managed investment trusts (MITs), which was enacted in 2016, operates as intended. The new tax system was designed to increase certainty, allow greater flexibility and reduce compliance costs for MITs and to enhance the competitiveness of Australia’s funds management industry.

    Treasury Laws Amendment (2018 Measures No. 5) Act 2019 (Act No. 15 of 2019), which contains the AMIT Technical amendments, received Royal Assent on 12 March 2019.

    The amendments in this Act clarify the operation of the income tax law applying to MITs and attribution MITs (AMITs) and make a number of modifications which are broadly in four parts.

    Part 1 makes modifications to the MIT and AMIT rules to:

    • allow a MIT with a single unitholder that is a specified widely held entity to access the AMIT regime
    • extend the list of specified widely held entities to include the Future Fund Board of Guardians
    • ensure that, in calculating rounding adjustments and trustee shortfall tax under the AMIT regime, discount capital gains are treated appropriately
    • clarify that, in relation to an amount that is a discount capital gain that is not attributed to members, the trustee of an AMIT is liable to pay income tax on the amount as though it were not a discount capital gain.

    Part 2 makes modifications to the MIT and AMIT CGT rules to:

    • clarify that the amount of the capital gain under CGT event E10 will be the cost base net amount where the cost base of the asset is nil at the start of the income year
    • align the CGT outcomes for MITs with AMITs.

    Part 3 makes modifications to the withholding tax rules for MITs and AMITs to:

    • clarify that withholding tax liabilities arise on amounts of actual or deemed fund payments and dividend, interest and royalty payments to foreign members by an AMIT or a custodian
    • ensure that in calculating fund payments made by MITs and AMITs, capital losses from non-taxable Australian property that have been applied against capital gains from taxable Australian property are added back
    • clarify that AMITs that only make deemed payments to members can be withholding MITs
    • clarify how the TFN withholding rules apply to AMITs that make deemed payments to members.

    Part 4 makes modifications to the operation of the AMIT transitional rules to:

    • ensure that former public trading trusts and corporate unit trusts can continue to use accumulated franking credits until 30 June 2019
    • ensure early balancing trusts can elect into the AMIT regime from the 2016–17 income year.

    More information

    For more information on the changes to the new tax system for MITs, refer to:

      Last modified: 19 Mar 2019QC 56936