This is the second deferral of the new MIT regime. When the Government first announced this measure, it was to commence from 1 July 2011. However, the Government then announced that the new rules would commence from 1 July 2012.
The Government indicated that it wanted more time for consultation with stakeholders regarding the implementation of the proposed reforms.
The new managed investment trust taxation regime has been much anticipated by fund managers. It is intended to not only improve and simplify the administration of MITs by fund managers, but also provide greater certainty regarding the tax consequences of investing in MITs for investors. Amongst other things, the MIT regime was intended to provide for a new “attribution” system of taxation on trust income, and provide certainty regarding the status of MITs as “fixed trusts” for tax purposes.
The deferral of the MIT regime to 1 July 2013 will provide fund managers with greater time to change and adapt to the new regime.
Importantly, it does mean that the current uncertainty following the decision of the Federal Court of Australia in Colonial First State Investments Limited v Federal Commissioner of Taxation regarding the status of MITs as “fixed trusts” will continue to remain unresolved.
It is hoped that some form of certainty can be provided to the funds management industry in relation to this important issue very soon.
The deferral should also provide fund managers with investors with a greater opportunity to participate in the consultation regarding the proposed MIT regime, to ensure that the MIT regime (when enacted and implemented) will have the best possible outcomes.
Please do not hesitate to contact us if you would like to discuss the new MIT regime, and how it is likely to apply to your trusts and investments.
Who does this affect?
All fund managers and investors that invest in or operate or manage managed investment trusts (MITs).
What do you need to do?