Neil Lamb and Steve Plant discuss two draft taxation determinations which may disincentivise foreign resident investors.
The Australian Taxation Office (ATO) has released two draft taxation determinations which may have the effect of bringing non-residents into the Australian tax net, notwithstanding that there is no gain sourced in Australia. This would seem to act as a disincentive to foreign resident investors and may provoke restructuring of current holdings to preserve the tax profile of current investments. There may also be wider consequences for managed investment trusts that do not benefit from deemed fixed trust status as Attribution Managed Investment Trusts (AMITS).
The ATO has stated that it does not consider that foreign residents are entitled to disregard capital gains on non-taxable Australian property (non-TAP) when distributed by an Australian resident non-fixed trust in Draft Taxation Determination TD 2019/D6.
An associated Draft Taxation Determination TD 2019/D7 concludes that the source concept is not relevant in determining whether the gain is assessable to the non-resident or trustee.
To continue reading this article, please log on to KPMG Tax Now.
Register for KPMG Tax Now if you're yet to do so.
©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation.
Liability limited by a scheme approved under Professional Standards Legislation.
For more detail about the structure of the KPMG global organisation please visit https://home.kpmg/governance.