ASIC has issued a media release announcing its intention to grant Class Order relief to allow registered funds to make changes to their constitutions for opting in to the new Attribution Managed Investment Tax (AMIT) regime without holding unitholders’ meetings. See the media release here.
ASIC intends to issue the Class Order relief on or before 22 June 2016 in order to allow registered funds to be able to make constitutional changes prior to the end of this financial year for those funds who wish to opt in to AMIT for the 2015-16 financial year.
The main condition to obtain Class Order relief will be that the Responsible Entity (RE) making the constitution amendments must provide a website notification that sets out the amendments and an explanation and give unitholders seven days to request a unitholders meeting. On the 8th day amendments will be able to be made provided that a request for a meeting has not been received from at least 5% of unitholders.
The relief will not impose the website notice requirement if all unitholders are wholesale investors and the RE has taken reasonable steps to consult with all of the unitholders before making the amendment. To prepare to take advantage of the expected relief, fund managers should start:
- drafting changes to constitutions; and
- drafting website notification.
What do you need to do by 30 June?
In the ordinary course, most REs will adopt the practical course and elect into the AMIT regime from the start of a new financial year. In most cases, funds with a 30 June balancing date should be considering whether to go into the regime from 1 July 2016 or 1 July 2017.
Such an assessment will require a consideration of a number of factors including the tax benefits of entering the regime, whether there is any detriment to the RE and unitholders if entry is deferred until 1 July 2017 and the extent of any systems and process changes that are required to accommodate the regime. This assessment only needs to be finalised at or before the time for making the election which will be when the fund’s tax return is lodged for the year in which the fund is entering the regime.
In contrast, the RE must ensure that its AMIT amendments are made before the start of the year in which the fund is entering the regime. In practical terms, an RE can only elect into the regime from 1 July 2016 if the relevant attribution provisions are in place in the constitution on or by 30 June 2016. If these changes are implemented by then, the RE has the flexibility to choose to elect into the regime from 1 July 2016 or 1 July 2017.