Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES

PART 3-25 - PARTICULAR KINDS OF TRUSTS

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Division 275 - Australian managed investment trusts: general

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History

Div 275 heading substituted by No 53 of 2016, s 3 and Sch 4 item 1, effective 5 May 2016. For application provision, see note under Div 276 heading. The heading formerly read:

Division 275 - Australian managed investment trusts

Div 275 inserted by No 56 of 2010, s 3 and Sch 3 item 4, effective 3 June 2010. No 56 of 2010, s 3 and Sch 3 item 10 contains the following application provision:

Application provision
(1)
The amendments made by this Schedule apply in relation to CGT events that happen on or after the start of the 2008-09 income year.

(2)
Despite subitem (1), subsections 275-100(5) and (6) of the Income Tax Assessment Act 1997 as inserted by this Schedule (and any other provision inserted by this Schedule, to the extent that it relates to those subsections) apply in relation to acquisitions of assets that happen on or after the start of the 2008 - 09 income year.

(3)
Despite subitem (1), section 275-120 of the Income Tax Assessment Act 1997 as inserted by this Schedule (and any other provision inserted by this Schedule, to the extent that it relates to that section) applies in relation to:

(a) disposals of assets; and

(b) cessations of ownership of assets; and

(c) other realisations of assets;
that happen on or after the commencement of this item.

(4)
Despite subitem (1), Subdivision 275-C of the Income Tax Assessment Act 1997 as inserted by this Schedule (and any other provision inserted by this Schedule, to the extent that it relates to that Subdivision) applies in relation to:

(a) entitlements to distributions that arise on or after the commencement of this item; and

(b) CGT events that happen on or after the commencement of this item.

(5)
Despite subitem (1), section 45-286 in Schedule 1 to the Taxation Administration Act 1953 as inserted by this Schedule (and any other provision inserted by this Schedule, to the extent that it relates to that section) applies in relation to distributions or applications of benefits that are made on or after the commencement of this item.

Subdivision 275-A - Meaning of managed investment trust

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History

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Subdiv 275-A substituted by No 53 of 2016, s 3 and Sch 4 item 3, effective 5 May 2016. For application provision, see note under Div 276 heading. Subdiv 275-A formerly read:

Subdivision 275-A - Meaning of managed investment trust

SECTION 275-5 SECTION 275-5 Treatment of trading trusts etc.
275-5
For the purposes of this Division, treat a trust in the same way as a *managed investment trust in relation to an income year if it would be a managed investment trust in relation to the income year if paragraph 12-400(2)(a) in Schedule 1 to the Taxation Administration Act 1953 were disregarded.
Note:

If a trading trust is treated as a managed investment trust for the purposes of this Division for an income year, sections 275-100 (CGT to be primary code for calculating MIT gains or losses) and 275-120 (revenue account treatment) will not apply to the trust for the year (see subsections 275-100(1), 275-110(1) and 275-120(1)).

SECTION 275-10 SECTION 275-10 Trust with investment management activities outside Australia
275-10
For the purposes of this Division, treat a trust in the same way as a *managed investment trust in relation to an income year if it would be a managed investment trust in relation to the income year if paragraph 12-400(1)(c) in Schedule 1 to the Taxation Administration Act 1953 were disregarded. SECTION 275-15 Every member of trust is a managed investment trust
275-15(1)
For the purposes of this Division, treat a trust in the same way as a *managed investment trust in relation to an income year if:

(a) the condition in paragraph 12-400(1)(a) in Schedule 1 to the Taxation Administration Act 1953 is satisfied; and

(b) either:

(i) the only *member of the trust is an entity covered by subsection 12-402(3) of that Schedule (other than an entity mentioned in paragraph (e) of that subsection); or

(ii) the only member of the trust is an entity treated in the same way as a managed investment trust in relation to the income year because of this Subdivision; and

(c) the trust satisfies the licensing requirements in section 12-403 of that Schedule in relation to the income year.
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History

S 275-15(1) amended by No 90 of 2010, s 3 and Sch 5 item 2, by substituting paras (a), (b) and (c) for paras (a) and (b), effective 29 June 2010. For application provision, see note under s 275-5. Paras (a) and (b) formerly read:

(a) the condition in item 1 of the table in subsection 12-400(1) in Schedule 1 to the Taxation Administration Act 1953 is satisfied; and

(b) every *member of the trust is a managed investment trust in relation to the income year (or a trust that is treated in the same way as a managed investment trust in relation to the income year through the operation of this Subdivision).

275-15(2)
A requirement in paragraph (1)(a) is satisfied if, and only if, it is satisfied:

(a) at the time the trustee of the trust makes the first *fund payment in relation to the income year; or

(b) if the trustee does not make such a payment in relation to the income year - at both the start and the end of the income year.
SECTION 275-20 No fund payment made in relation to the income year
275-20
For the purposes of this Division, treat a trust in the same way as a *managed investment trust in relation to an income year if:

(a) the trustee of the trust does not make a *fund payment in relation to the income year; and

(b) the trust would be a managed investment trust in relation to the income year (or a trust that would be treated in the same way as a managed investment trust in relation to the income year through the operation of this Subdivision) if the trustee of the trust had made the first fund payment in relation to the income year on the first day of the income year; and

(c) the trust would be a managed investment trust in relation to the income year (or a trust that would be treated in the same way as a managed investment trust in relation to the income year through the operation of this Subdivision) if the trustee of the trust had made the first fund payment in relation to the income year on the last day of the income year. SECTION 275-30 Temporary circumstances outside the control of the trustee
275-30
If, apart from a particular circumstance, a trust would be treated under this Subdivision in the same way as a *managed investment trust in relation to an income year, treat the trust in the same way as a managed investment trust in relation to the income year for the purposes of this Division if:

(a) the circumstance is temporary; and

(b) the circumstance arose outside the control of the trustee of the trust; and

(c) it is fair and reasonable to treat the trust as a managed investment trust in relation to the income year, having regard to the following matters:

(i) the matters in paragraphs (a) and (b);

(ii) the nature of the circumstance;

(iii) the actions (if any) taken by the trustee of the trust to address or remove the circumstance, and the speed with which such actions are taken;

(iv) the extent to which treating the trust as a managed investment trust in relation to the income year would increase or reduce the amount of tax otherwise payable by the trustee, the beneficiaries of the trust or any other entity;

(v) any other relevant matter.
SECTION 275-35 Application of subsections 102L(15) and 102T(16)
275-35
To avoid doubt, subsections 102L(15) and 102T(16) of the Income Tax Assessment Act 1936 do not apply for the purposes of this Division.

Subdiv 275-A inserted by No 56 of 2010, s 3 and Sch 3 item 4, effective 3 June 2010. For application provision, see note under Div 275 heading.

Operative provisions

SECTION 275-30 Closely-held restrictions

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275-30(1)
The trust satisfies the requirements in this subsection in relation to the income year unless, at any time in the income year, any of the following situations exist:

(a) for a trust mentioned in subparagraph 275-10(3)(d)(i) (trusts with wholesale membership) - 10 or fewer persons have a total *MIT participation interest in the trust of 75% or more;

(b) if paragraph (a) does not apply - 20 or fewer persons have a total MIT participation interest in the trust of 75% or more;

(c) a foreign resident individual has a MIT participation interest in the trust of 10% or more.

275-30(2)
For the purposes of paragraphs (1)(a) and (b):

(a) if an entity covered by subsection 275-20(4) has a *MIT participation interest in the trust - treat that entity as not having a MIT participation interest in the trust; and

(b) if an entity that is not a trust has a MIT participation interest in the trust because it holds interests in the trust indirectly, through a *chain of trusts:

(i) if the entity is covered by subsection 275-20(4) - do not treat it as having a MIT participation interest in the trust; and

(ii) do not treat a trust in the chain of trusts as having a MIT participation interest in the trust.

275-30(3)
For the purposes of paragraph (2)(b), treat an entity covered by subsection 275-20(4) as an entity that is not a trust.

275-30(4)
For the purposes of paragraphs (1)(a) and (b), apply the rules in subsection 275-20(7) .

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