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-L - Modification for non-arm ' s length income

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Operative provisions

SECTION 275-610 Non-arm ' s length income

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275-610(1)
An amount of *ordinary income or *statutory income is non-arm ' s length income of a *managed investment trust if:

(a) it is derived from a *scheme the parties to which were not dealing with each other at *arm ' s length in relation to the scheme; and

(b) that amount exceeds the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm ' s length in relation to the scheme; and

(c) the amount is none of the following:

(i) a distribution from a *corporate tax entity;

(ii) a distribution from a trust that is not a party to the scheme mentioned in paragraph (a);

(iii) a *return covered by subsection (2).

275-610(1A)

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Disregard subparagraph (1)(c)(ii) if the amount of *ordinary income or *statutory income is *excepted MIT CSA income.

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275-610(2)
This subsection covers a *return that an entity pays or provides on a *debt interest, if the rate (expressed on an annual basis) of the return does not exceed the greater of:

(a) the *benchmark rate of return for the interest; and

(b) the *base interest rate for the day on which the return is paid or provided, plus 3 percentage points.

275-610(3)
Subsection (4) applies if:

(a) an amount would be *non-arm ' s length income of the *managed investment trust (disregarding that subsection); and

(b) the amount is a distribution from a trust, or a share of the *net income of a trust, if the trust is a party to the scheme mentioned in paragraph (1)(a).

275-610(4)
The amount is *non-arm ' s length income of the *managed investment trust only to the extent that the distribution or share of *net income is attributable to non-arm ' s length income of the trust mentioned in paragraph (3)(b) (on that assumption that the trust were a managed investment trust) because of another operation of this section.

275-610(5)
Subsection (6) applies if:

(a) an amount (the first amount ) of *ordinary income or *statutory income of the *managed investment trust that would be *non-arm ' s length income of the managed investment trust (disregarding that subsection) is:

(i) a distribution from a trust that is a party to the scheme mentioned in paragraph (1)(a); or

(ii) a share of the *net income of a trust that is a party to that scheme; and

(b) another amount (the second amount ) of ordinary income or statutory income of the managed investment trust is:

(i) a distribution from another trust (whether or not the other trust is a party to that scheme); or

(ii) a share of the net income of another trust (whether or not the other trust is a party to that scheme); and

(c) it is reasonable to conclude that the second amount would have been higher but for the first amount.

275-610(6)
The first amount is not *non-arm ' s length income of the *managed investment trust to the extent that the second amount would have been higher as mentioned in paragraph (5)(c).

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