A new tax system for managed investment trusts

The proposed new tax system for managed investment trusts (MITs) will modernise the tax rules for eligible MITs and increase certainty for both MITs and their investors. The new rules will enhance the international competitiveness of Australian managed funds and promote the greater export of Australia’s funds management expertise.

The exposure draft legislation has been developed in close consultation with key stakeholders in the managed funds industry.

The key features of the new tax system for eligible MITs include:

• an attribution model for determining member tax liabilities, which allows amounts to retain their tax character as they flow through a MIT to its members;
• the ability to carry forward understatements and overstatements of taxable income, instead of re-issuing investor statements;
• deemed fixed trust treatment under the income tax law;
• upwards cost base adjustments to address double taxation; and
• legislative certainty about the treatment of tax deferred distributions.