Attribution managed investment trusts

Under the changes enacted in May 2016, an eligible MIT may elect into the new attribution regime for the taxation of MITs. Those that choose to apply the new tax system are referred to as attribution managed investment trusts (AMITs).

The new tax system for MITs:

  • allows AMITs to use an attribution method of tax (in lieu of the existing present entitlement to income method in Division 6 of the Income Tax Assessment Act 1936)
  • allows AMITs to carry forward under- and over-estimates of tax amounts into the discovery income year, generally without adverse tax consequences
  • deems AMITs that meet eligibility requirements to be fixed trusts
  • allows unit holders in AMITs to make, in certain circumstances, both upward and downward adjustments to the cost base of their unit holdings to eliminate double taxation that may otherwise arise
  • introduces an arm’s length rule for all MITs that aims to ensure related entities undertake transactions between one another in a manner that reflects commercial dealings
  • amends the 20% tracing rule for public unit trusts in Division 6C of the Income Tax Assessment Act 1936 so it does not apply to super funds and exempt entities that are entitled to a refund of excess imputation credits.

If you are a MIT trustee, the new tax system allows you to choose to apply the attribution rules for an income year starting on or after 1 July 2015. The way a MIT's tax return is prepared for that income year will be sufficient evidence of the making of the choice.

If you make the choice to apply the new rules from the earlier start date of 1 July 2015, you must ensure you meet the requirements and obligations under the new rules.

If you don't elect to apply the new rules, you must continue to fulfil your existing obligations under Division 6 of the Income Tax Assessment Act 1936.

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    Last modified: 06 Oct 2016QC 47436