The Senate Economic Legislation Committee (Committee) has today issued its report recommending that the Senate pass the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Bill 2015 (AMIT Bill).
This leaves open the path for the passing of the legislation into law.
More generally, the Committee believe that the AMIT Bill is long overdue and will modernise the tax treatment of managed investment trusts in Australia. It also noted the important of the legislation in the context of the new Asian Region Funds Passport.
The Committee also accepted the important submission that a post implementation review be undertaken by Treasury by 1 July 2018.
Key focus areas for the Committee
The Committee made comments in relation to some specific areas where concern had been raised in relation to provisions of the AMIT Bill. These included:
- Custodial withholding tax liability: A concern had been raised that the withholding provisions may create a credit risk for custodians.
The Committee recognised the concerns of the custodians but did not believe it was appropriate to delay the introduction of the legislation by making alterations to the withholding tax mechanism.
Previous drafts of the AMIT Bill had contained what had become known as the “custodial liability transfer provisions”. The removal of these provisions had simplified the scope of the amendments required to most constitutions.
- Cost base adjustments: The Committee noted some specific concerns in relation to the new cost base adjustment rules.
It was specifically recognised that Treasury and the Australian Taxation Office would monitor the operation of the new rules to identify and rectify any unintended consequences. This is to be done in consultation with industry.
- Commencement date: It had been suggested that the commencement date be delayed until 1 July 2017.
The Committee recognised that whilst there was significant investment required to manage the new regime, it was in the best interests of the sector not to delay the introduction of the legislation.