Managed investment trusts - overview

A managed investment trust (MIT) is a type of unit trust in which members of the public collectively invest in passive income activities, such as shares, property or fixed interest assets. A trust qualifies as a MIT if it meets certain requirements for the income year it is in operation.

MITs (and their members) are generally taxed under the trust provisions in Division 6 of the Income Tax Assessment Act 1936. Under these provisions, beneficiaries are generally taxed on their share of the net income of a trust or the trustee is taxed on their behalf, based on the 'present entitlement' of beneficiaries to trust income.

Changes to taxation of MITs

On 5 May 2016, the government enacted changes to the taxation of MITs. Eligible MITs may elect to apply the new rules for an income year starting on or after 1 July 2015. Once a MIT elects in, the trust provisions in Division 6 will no longer apply to that MIT. MITs that elect into the new regime are referred to as attribution managed investment trusts (AMITs) and are generally taxed under Division 276 of the Income Tax Assessment Act 1997.

The new tax system also introduces changes for MITs generally, including amendments to the rules around withholding and non-arm's length income.

Changes to taxation of unit trusts

In addition, the law includes changes to the tax treatment of certain corporate unit trusts and public trading trusts due to the repeal of Division 6B and changes to the 20% tracing rule in Division 6C.

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    Last modified: 06 Oct 2016QC 47436