11 Feb 1010 Minister announces amendment to the withholding tax definition of a managed investment trust
In media release No 2010/020, 10 February 2010, the Assistant Treasurer, Senator Nick Sherry, announced an expansion of the definition of a managed investment trust (MIT) in relation to the withholding tax rules.
This follows the introduction into Parliament of Tax Laws Amendment (2010 Measures No 1) Bill 2010 which, in Schedule 3, contains legislation to allow MITs to elect to have the capital gains tax regime as the primary code for taxing gains and losses on the disposal of key investments.
The Minister said that the expansion of the definition of a MIT in relation to the withholding tax rules will ensure closer alignment of the withholding tax definition with the extended definition of a MIT contained in the capital election reforms.
To achieve closer alignment, the MIT withholding tax definition will be extended to include both wholesale managed investment schemes and government-owned managed investment schemes, subject to appropriate integrity rules. The changes will also amend the MIT withholding tax definition to introduce a trading business test for trusts that would otherwise qualify as a MIT and will clarify the operation of the definition where there is only one member.
The Minister said that numerous submissions on the draft capital election Bill called for a closer alignment of the definitions of a MIT for the capital account treatment and for the withholding tax rules.
The proposed changes will have effect in relation to certain distributions from MITs made in relation to the period commencing from 1 July 2010.
The Minister said that the Government will consult with relevant industry representatives in developing the changes required to achieve closer alignment of the MIT definitions.