In media release No 2010/004, issued 18 October 2010, the Assistant Treasurer and Minister for Superannuation and Financial Services, Bill Shorten, announced the release of a discussion paper on the design and implementation details of the Government's new income tax system for managed investment trusts (MITs).
The Government announced the new tax system for MITs on 7 May 2010. The new system will benefit investors and trustees by removing longstanding uncertainty about the treatment of the income of MITs.
Key features of the new MIT tax system include:
- an elective "attribution" system of taxation under which investors will be taxed only on the income that the trustee allocates to them on a fair and reasonable basis, consistent with their entitlements under the trust deed or the trust's constituent documents;
- establishing the ability to deal with "under" or "over" distributions within a 5% cap so that trusts are not required to reissue distribution statements and investors are not required to revisit tax returns; and
- removing double taxation that can arise in certain circumstances.
The changes are to have effect from 1 July 2011.
The Minister said that a further round of public consultation on exposure draft legislation and associated explanatory materials is planned for later this year. It is expected that legislation will be introduced into the Parliament in the first half of 2011.
Submissions on the discussion paper are requested by close of business on Monday, 15 November 2010.