11 Apr 11 Minister confirms start date of the new tax system for Managed Investment Trusts to be deferred
In media release No 2011/050, issued 8 April 2011, the Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, comfirmed his earlier announcement - see 2011 TAXVINE No 12 (8 April 2011) - that Managed Investment Trusts (MITs) will have an extra year to get ready for the new MIT tax system, with the commencement date deferred from 1 July 2011 to 1 July 2012.
Mr Shorten said that the Government will also introduce amendments to the tax law to prevent any income tax consequences that might arise from a resettlement where a MIT changes its trust deed (or other constituent documents) to meet the "clearly defined rights" requirement under the new MIT tax system.
The Government will also make a minor change to the proposed de minimis rule allowing MITs to carry forward under and over distributions into the next income year without adverse taxation consequences. This change will replace the alternative test of the de minimis threshold of a 'prescribed dollar value per unit' with a '0.4 of 1% of net assets' test. The primary test of 5% of the MIT"s taxable income will be unchanged.
"The proposed 'percentage of net assets' test is superior to the 'prescribed dollar value per unit' test because it will operate more equitably for MITs with a similar net worth but a different number of units. The test will provide an appropriate alternative test in years of low returns, when the primary test could be unintentionally restrictive," Mr Shorten said.
Finally, Mr Shorten said that the Government plans to undertake public consultation on draft legislation in the coming months.