Australia: Legislative proposals would affect managed investment trusts

Australia: Managed investment trusts

Pending legislation—the Attribution Managed Investment Trusts (AMIT) bills—would mean that, if enacted, managed investment trusts (MITs) would need to decide whether to elect to become AMITs and, if so, when to make such an election.

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As proposed, the AMIT legislation would enable a trustee to elect to become an AMIT from the income year beginning on or after 1 July 2016 (although there is a provision for a trustee to elect early adoption for an income year starting on or after 1 July 2015). The election is irrevocable.

AMIT advantages

There are a number of advantages associated with becoming an AMIT including:

  • Deemed fixed trust status
  • Access to the “unders / overs” regime
  • Upwards cost base adjustments
  • Multi-class units
  • Fixed review period by the tax authorities

KPMG observation

There is no immediate imperative to elect into the AMIT regime. The first income year beginning on or after 1 July 2017, however, is likely to be important. If an MIT becomes an AMIT on or before that date, then “unders” and “overs” arising from pre-AMIT periods would be incorporated into the new unders / overs regime. Hence, the fixed review period of the Australian Taxation Office (ATO) would seem to apply. Consistent with this approach, the ATO publicly stated that for subsequent income years, the tax authorities would be “monitoring the treatment of unders and overs by trusts not electing into the new rules and allocating client resources based on overall risk management principles.”

 

 

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