Restructures to access the MIT withholding regime
We have issued Taxpayer Alert TA 2025/1 Managed investment trusts: restructures to access the managed investment trust withholding regime. This alert identifies our concerns with certain restructures undertaken to access the concessional withholding tax rates. Consider TA 2025/1 for what could attract the application of the general anti-avoidance rules.
Clarifying tax arrangements for managed investment trusts
The Australian Government announced on 13 March 2025 that there will be amendments to the income tax laws to ensure certain investors can continue to access concessional withholding tax rates in Australia. The announcement indicates that those amendments are intended to apply to fund payments made from the date of the announcement. For more information, see The Hon Stephen Jones MP media release Clarifying tax arrangements for managed investment trustsExternal LinkExternal Link.
Administrative treatment
Taxpayers may rely on PS LA 2007/11 Administrative treatment of taxpayers affected by announced but unenacted legislative measures which will apply retrospectively when enacted and self-assess as a managed investment trust (MIT) prior to the law change being made. We will accept tax returns as lodged during the period up until the proposed law change is passed by parliament. Past year assessments will not be reviewed until the outcome of the proposed amendment is known.
After the new law is enacted, taxpayers will need to review their positions back to the 2024–25 income year. Those taxpayers who self-assessed as a MIT (consistent with the passed law change) and claimed the concessional MIT withholding rate do not need to do anything more.
If a trust self-assesses as a MIT under the media release, but once the amendments become law it becomes clear they were not eligible or the applicable withholding rate was higher, the tax will be greater (at least 15% more) and the assessment process may differ (trustee assessment rather than withholding).
These taxpayers will need to seek amendments. No tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change. In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted where taxpayers actively seek to amend assessments within a reasonable timeframe after enactment.
Announced measures that are not yet law will be subject to consideration by government. We can't provide advice on unenacted measures.