The tax characteristics relating to assessable income, exempt income, non-assessable non-exempt income (NANE) and tax offsets are retained when an AMIT trustee attributes an amount to a member. The tax consequences for the member should generally be the same as if they had received the income or paid an amount directly.
This is done by both:
- assuming the member derived, received, made or paid the amount in their own right
- taking the circumstances under which, the AMIT derived, received, made or paid that amount to be the same for the member being attributed the amount.
'Character' is not defined in the legislation but has its ordinary meaning. Each amount that attracts different tax consequences will have its own character.
An amount can have only one particular character that include:
- different types of assessable income such as
- discount capital gains and non-discount capital gains
- dividends, interest or royalties that are subject to withholding tax
- foreign source income
- franking credit gross-up
- exempt income or NANE income
- tax offsets.
For more information see also Law Companion Ruling LCR 2015/6 Attribution Managed Investment Trusts: character flow through for AMITs.