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10 Dec 09 Release of draft legislation on tax treatment of Managed Investment Trusts disposals

In a media release issued on 10 December 2009, the Assistant Treasurer, Senator Nick Sherry, announced the release, for public consultation, of draft legislation, together with explanatory material, on the proposed changes to the taxation of gains and losses on disposal of investments by managed investment trusts (MITs).

The changes, which were announced in the 2009-10 Budget, will allow an eligible MIT to irrevocably elect capital account treatment for gains and losses on disposal of certain investments with effect from the 2008-09 income year.

"As a result of consultations, the draft Bill expands the concept of a MIT for the purposes of this measure. These changes will ensure state operated trusts, as well as wholesale trusts, are also able to qualify for the concession. Also, the Government has decided to provide further certainty by specifying the assets to be covered by capital account treatment – these are shares, units and certain land investments," the Assistant Treasurer said.

In addition, the Bill confirms:

  • if a MIT does not elect capital account treatment, then the gains and losses on disposals of shares and units will be treated on revenue account;
  • that distributions or gains on "carried interest" units in a MIT are on revenue account; and
  • these changes will have effect from Royal Assent.

"The Government welcomes further public comment on the draft Bill and explanatory materials by Thursday, 24 December, 2009 – this will allow the introduction of the Bill early in 2010," the Assistant Treasurer said.

For a copy of the Assistant Treasurer's media release, No 2009/106, 10 December 2009, go here

For a copy of the draft legislation and explanatory material, go here


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