Publication date: 07 May 10 |
Source: THE TAX INSTITUTE
Government changes to the taxing of managed investment trusts are good news for millions of Australians, the country's leading taxation professional body said today.
The Taxation Institute of Australia says simplification of the tax rules for MITs is necessary to remove inconsistencies and uncertainty that have existed for years.
"Even after the landmark Bamford Case in the High Court in March this year some grey areas remained in relation to the taxation of trusts," Institute Senior Counsel Robert Jeremenko said.
"Further, in the Bamford Case, the High Court pointed out that it was more than two decades since the courts first identified the need for legislative clarification in this area of tax law."
Under existing law, trust beneficiaries could be taxed on amounts they have not received and trustees could be taxed at the top marginal rate on amounts already distributed to investors. The Government's announced changes should mean investors will only be taxed on income that a trustee allocates to them on a 'reasonable and fair basis' and in line with a trust deed.
"This is a positive step towards simplification and achieving certainty," said Robert Jeremenko.
Mr Jeremenko also said the announced abolition and re-write of corporate unit trust laws was another positive step and the Institute looked forward to being able to contribute to the process of drafting new rules.
"The Board of Taxation had pointed out the absence of a rule to manage taxing of under and over adjustments and this has also been addressed.
"Allowing adjustment to be made to the capital gains tax cost base should eliminate the potential for MITs to be double-taxed."
"Overall the proposed changes are a positive step forward in relation to the tax treatment of MITs."
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Robert Jeremenko, Senior Tax Counsel - Taxation Institute of Australia on 0468 987 300
Craig Regan - Lighthouse Communications (0408) 448 527