Peter Oliver and Scott Farrell discuss changes in the Attribution Managed Investment Trust (AMIT) regime.
The Government has reaffirmed its commitment to ensuring the Attribution Managed Investment Trust (AMIT) regime is attractive to the managed investment industry. On 19 July 2017, the Minister for Revenue and Financial Services announced a number of changes, including some that had been sought by industry, other integrity measures and unrelated changes to improve the Investment Manager Regime.
Many trustees are evaluating whether to adopt the AMIT regime and undertaking extensive implementation projects.
The more significant changes are summarised below and their impacts need to be carefully considered as part of existing AMIT projects.
|Allowing early-balancing trusts to become AMITs before 1 January 2017||This overcomes a technical limitation in the existing rules and is a welcome change.|
|Allowing MITs with single unitholders that are not MITs to qualify as AMITs||Currently, trusts with single unitholders that are qualifying widely held entities can be MITs but they cannot be AMITs unless the unitholder is another MIT. This change will allow MITs with single unitholders such as superannuation funds or life insurance companies to become AMITs and removes a blocker for some trusts becoming AMITs.|
|Removing Non-TAP capital losses from fund payment calculations||This change is consistent with the principle that direct foreign investors do not benefit from non-TAP capital losses. However, it will require careful consideration and system complexity for custodians and trustees of widely held funds with minority foreign investors.|
|Former public trading trusts or corporate unit trusts will be able to distribute accumulated franking balances||There was a technical inconsistency in the existing rules which resulted in the cancellation of accumulated franking credits when a trust ceased to be subject to Division 6B or 6C. Trustees may have been unknowingly caught by this issue and the announcement is welcome.|
|Aligning cost base adjustments between AMITs and other trusts for CGT concession amounts.||As the AMIT regime does not recognise Capital Gain Tax (CGT) concession amounts, it can result in worse cost base outcomes for unitholders compared to other trusts. This change will align outcomes and may assist trustees in their member best interest analysis. It is also a disincentive for remaining outside the AMIT regime.|
Industry has a number of other issues on its wishlist for the AMIT rules, which we will continue to discuss with Treasury and the Australian Taxation Office (ATO). As with many trust related issues, the success of the AMIT regime depends on collaborative engagement between the ATO and industry to practically apply the legislative principles.
Consultation to date between industry, Treasury and the ATO has been positive and with the recommendation of the Senate Economics. Legislation Committee that a comprehensive post-implementation review occurs by 1 July 2018, the prospects for a mature, well-functioning regime look good.