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Shorten releases discussion paper on MIT tax system
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| Bill Shorten
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The Minister for Superannuation and Financial Services, Bill Shorten, has released a discussion paper on the design and implementation details of the Government’s new income tax system for managed investment trusts (MITs).
The Government announced the new tax system for MITs earlier this year and said it would remove the longstanding uncertainty around the treatment of the income of MITs.
Shorten said key features of the new MIT tax system include an elective ‘attribution’ system of taxation under which investors will be taxed only on the income the trustee allocates them and the ability to remove double taxation that can arise in certain circumstances, among others.
“Once implemented, the Government’s reforms will increase certainty for managed funds, reduce complexity and lower costs for MITs and their investors,” said Shorten, adding these changes will take effect from 1 July, 2011.
A further round of public consultation on exposure draft legislation is planned for later this year, while it is expected that legislation will be introduced into the Parliament in the first half of 2011.
Two major features of the new tax system for MITs have already been legislated. The trustee of a MIT can choose to apply the capital gains and losses regime to the disposal of eligible assets. Also, most foreign investors will have a reduced rate of final withholding tax of 7.5 per cent applied to fund payments from a MIT.
AUTHOR
Mike Taylor
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