Attributing amounts to members
A key objective of the attribution method is to ensure that members who invest in an AMIT are taxed on the trust income and other amounts in broadly the same way that they would have been taxed if they had held the assets of the AMIT directly.
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The trustee of the AMIT works out on a fair and reasonable basis how much of the determined trust component of a particular character should be attributed to each member, based on their membership interests in the trust. This is called the 'member component' of a particular character.
Determined member component
The trustee must then issue a statement to each member called an AMIT member annual (AMMA) statement, advising them how much of the particular character amounts have been attributed to them (the 'determined member component').
Where you are a member of an AMIT, for each determined member component attributed to you, you are treated for tax purposes as though you had derived, received, made or paid that amount:
- in your own right (rather than as a member of a trust), and
- in the same circumstances as the AMIT derived, received, made or paid that amount, to the extent those circumstances give rise to the particular character.
The income and tax offset amounts will keep the same tax characteristics as they had for the trustee, so you will be taxed on those amounts as if you had had derived, received, made or paid those amounts in your own right, rather than as a beneficiary of a trust – in effect, you are 'standing in the shoes' of the trustee, and the income and tax offset amounts retain their character once attributed to you.
This means, for example, that your determined member components relating to assessable income will be used to determine your assessable income for the income year. This may be different from the amount you receive in actual cash payments.
Fair and reasonable basis
The trustee must attribute amounts to members on a fair and reasonable basis that is consistent with constituent documents of the trust, such as the trust deed.
An attribution will be considered to be fair and reasonable when:
- the decision follows the constituent documents of the trust, and
- it does not involve 'streaming' of amounts based on the tax characteristics of the member.
Streaming based on the tax characteristics of a member does not necessarily occur because the attribution reflects the member's economic interests in the assets of the trust. Members can invest in particular classes within the trust that will best suit their tax profile, in which case the attribution will be based on their particular ownership interests rather than streamed to create a tax advantage.
If the trustee does not include all of the assessable income or tax offsets of the AMIT (that is, all of the trust components) in determined member components attributed to members, the trustee will generally be taxed on any unattributed amounts.
When an AMIT that is a withholding MIT gives a member an AMMA statement, the trustee may also be deemed to have made a payment to the member.
The deemed payment is the amount of the determined member component (less certain actual payments made in relation to the income year) and reflects the amount that has been attributed to the member, which may be different from the amount of actual payments made to the member.
Where the withholding rules apply, the AMIT will need to pay an amount of tax to us for the deemed payment, equal to the amount it would be required to withhold if it were an actual payment.
Annual Investment Income Report (AIIR)
An AMIT reports the amounts attributed to members to us using an Annual Investment Income Report (AIIR). All AMITs are required to submit an AIIR, regardless of how many members are in the trust. We will use the AIIR as a record of the amount of income each member has been attributed by the trust.
An AMIT has an obligation to give each member an attribution MIT member annual (AMMA) statement no later than three months after the end of the income year.
The AMMA statement sets out the determined member components that an AMIT attributes to the member for that income year, that is the income and tax offset amounts attributed to the member. The member then uses the information in the AMMA statement to complete their own tax return. Essentially, the AMMA statement replaces the standard distribution statement provided by other types of investment trusts.
While the AMMA statement is not required to be in a form approved by the ATO, it must contain certain information for the member, which includes:
- the amount and character of each determined member component for the income year
- amounts that affect the cost base of the member’s unit or interest in the AMIT (that is, the AMIT net cost base amount).
If an AMIT fails to give an AMMA statement, the trustee may be liable to penalty.