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12 May 09 Managed investment trusts (MITs)

The Government will allow Australian managed investment trusts (MITs), except those that are taxed like companies, to make an irrevocable election to apply the capital gains tax (CGT) regime as the primary code for taxing certain disposals of assets, with effect from the 2008 09 income year. This measure implements the interim advice of the Board of Taxation review of taxation of MITs.

This measure will ensure that the taxation treatment of disposals of assets (primarily shares in a company, units in a unit trust and real property investments) by MITs is consistent with the taxation treatment of disposals of similar investments by complying superannuation funds, subject to appropriate integrity rules including that the investments meet the eligible investment business rules in Division 6C of the Income Tax Assessment Act 1936.

MITs that can elect into the regime will be required to make an irrevocable election to apply the CGT regime to all disposals of eligible investments in the first income year that commences on or after the 2008-09 income year. Currently, gains and losses on disposal of investments by MITs may be on capital or revenue account, depending upon the characterisation of the investment activities concerned.
This measure furthers the Government’s commitment to promote Australia as a financial services hub and will ensure that Australian managed funds remain competitive in global financial markets.

For more information, see the Assistant Treasurer's media release, No 2009/49, 12 May 2009

For a copy of the Board's report, go here

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