19 Apr 10 Exposure draft of Managed Investment Trust (MIT) amendments
On 16 April 2010, the Assistant Treasurer released for public consultation the exposure draft legislation that will amend the definition of a managed investment trust (MIT) in relation to withholding tax rules.
The amendments were announced on 10 February 2010, in Media Release No 20 of 2010. The Government also proposes Parliamentary amendments to Tax Laws Amendment (2010 Measures No 1) Bill 2010 which recently introduced Division 275 to ITAA 1997 (the MIT capital measure).
Together, these amendments will effectively replace the proposed extension of the definition of a MIT for the proposed MIT capital measure to both wholesale funds and government-owned managed investment schemes, with a more targeted application of the MIT withholding tax rules to include both wholesale managed investment schemes and government-owned managed investment schemes.
The proposed changes also amend the MIT withholding tax definition to introduce a trading business test for trusts that would otherwise qualify as a MIT, to clarify the operation of the definition where there is only one member, and to clarify that the management of the trust must be maintained onshore.
Amendments are also proposed to ensure the MIT withholding tax rules are appropriately targeted at widely held trusts. This includes the introduction of a rule to exclude closely held trusts, and the addition of certain widely held pooled superannuation trusts to the list of specified widely held entities in Subdivision 12-H of Schedule 1 to the Taxation Administration Act 1953.
The closing date for submissions is Friday, 23 April 2010.