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Edited version of private advice
Authorisation Number: 1051781936102
Date of advice: 2 December 2020
Ruling
Subject: Extension of time for a managed investment trust to make an election under Div 275 of the Income Tax Assessment Act 1997
Question
Will the Commissioner exercise the discretion in subparagraph 275-115(3)(a)(ii) of the Income Tax Assessment Act 1997 (ITAA 1997) to allow a later day for the Trustee of the Trust to make a choice for capital gains to be the primary basis for calculating gains or losses of the trust from the disposal of trust assets?
Answer
Yes
This ruling applies for the following period:
Year ended 30 June 20XX
The scheme commences on:
1 July 20XX
Relevant facts and circumstances
Coy A is the trustee for the Trust - a managed investment trust (MIT) formed in XXX 20XX.
No MIT capital election was documented or made at this time as it was believed that the primary investor would not satisfy the widely held requirements to be an eligible investor under the MIT regime.
Based on this belief a MIT capital election was instead made by an underlying trust.
It was recently discovered that the primary investor was a widely held investor and consequently, the Trust satisfied the MIT requirements.
The Trust has not made any distributions in the 20XX or 20XX income years and there is no adverse consequence to the ATO in granting an extension.
The Trust does not receive any additional advantage rather it will be in the same position as other MITs.
There is no question of improper purpose or bad faith on the part of the Trustee.
Relevant legislative provisions
Division 275 of the Income Tax Assessment Act 1997