AMIT Regime Implementation – Where are we at?

AMIT Regime Implementation – Where are we at?

Craig Marston explores the status of technical and practical implementation issues with the Attribution Managed Investment Trust Regime.

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Senior Manager, Tax

KPMG Australia

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The Attribution Managed Investment Trust (AMIT) Regime has been with us now since May 2016 and it is therefore timely to consider where implementation is at. As many trusts race to elect-in for 2017-18, a number of interesting technical and practical implementation issues have emerged. These issues are challenging our understanding of the current MIT 'industry practice' and will shape the way trustees administer AMITs going forward.

In a paper I presented earlier this month for The Tax Institute (TTI), I explored some of these issues and set out the following key messages:

  • The majority of eligible trusts are targeting a 1 July 2017 start date.
  • The various implementation issues emerging mean that trustees can’t assume their current administration practices are necessarily 'AMIT ready'.
  • The AMIT Regime introduces a new 'same but different' industry practice - especially evident around allocating trust expenses, 'unders' and 'overs' treatment, and certain withholding tax compliance practices.
  • Industry has identified several technical uncertainties with the AMIT legislation which have been raised with Treasury. Legislative clarification is anticipated in due course but not before 1 July of course!

Despite some implementation uncertainties, there are several compelling 'carrots' and persausive 'sticks' to encourage electing-in to the AMIT Regime. In particular:

  • the treatment of 'unders' and 'overs' arising in future years – the availability of transitional relief is limited, and the Australian Taxation Office (ATO) has flagged its preparedness to devote compliance resources to non-AMITs relying on current industry practice post 30 June 2017
  • the ability to provide AMIT members with cost base uplifts where cash distributed is less than assessable income attributed for an income year and
  • product innovation emerging from the AMIT Regime – for example, around holding back cash, treating each trust class as a separate AMIT, and issuing debt like trust instruments.

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