Under the new tax system for MITs, an attribution managed investment trust (AMIT) can choose to treat separate classes within the trust as if they were separate AMITs.
Using the attribution system, where the interests in the income and capital of the AMIT are divided into separate classes, the AMIT will be able to apply the attribution regime separately to each class of interests if:
- the rights in the income and capital of the particular class are the same for every membership interest in that class
- each of those interests in a particular class is distinct and different to the interests in another class
- the trustee has made a choice to apply the attribution regime separately to each class of interests.
Once the trustee chooses to use the multi-class treatment, the choice cannot be revoked.
Each class will effectively be treated as a separate AMIT. On this basis, the trust components and member components will be calculated for each class as though they were a separate AMIT, rather than across the AMIT as a whole.
Where a class makes a tax loss for an income year, and other classes have positive taxable income, the losses are quarantined within the class and not shared by the other classes. The class with the tax loss will have nil trust and member components and will carry forward the loss within that class to a future income year.
However, the multi-class treatment only applies once a trust qualifies as an AMIT. That is, for the purpose of determining whether a MIT qualifies as an AMIT, an AMIT with multiple classes will continue to be treated as a single entity.
The same will apply for withholding purposes – while the AMIT withholding rules apply separately to each class, it is sufficient that the AMIT as a whole qualifies as a withholding MIT, rather than each class qualifying as a withholding MIT in its own right.
Where possible, each class is treated as having separately identified assets to other classes within the AMIT. The assessable income and deductions and other trust attributes relating to that class will be identified by the assets supporting that class.
Transactions and events involving those assets will need to be recognised for tax purposes as though the class was a separate AMIT. This will ensure that the tax attributes attributable to one class of interest will not be mixed with those of other classes.
For classes within the AMIT that have separately identified assets, any movement or transfer of assets between classes may have CGT implications due to each class being treated as a separate AMIT.
Where the assets of the AMIT are pooled, each class's share of the pooled assets should be determined on a reasonable basis. The assessable income and allowable deductions of the trusts must be allocated across the classes according to each class's appropriate share of the trust's pooled assets and the AMIT's constituent documents.
Selectively directing tax attributes from pooled assets to different classes that have shared those assets could be considered 'streaming' and not an allocation on a fair and reasonable basis. Tax losses, net capital losses or expenditure that does not relate solely to a particular class must also be allocated between each class on a fair and reasonable basis.
- Law Companion Ruling LCR 2015/5 Attribution Managed Investment Trusts: choice to treat separate classes as separate AMITs
Using the new AMIT tax return, an AMIT that elects to apply multi-class treatment will need to lodge a separate AMIT schedule for each class. There is no requirement to lodge a separate tax return for each class.