Income Tax Assessment Act 1997

CHAPTER 4 - INTERNATIONAL ASPECTS OF INCOME TAX  

PART 4-5 - GENERAL  

Division 840 - Withholding taxes  

Subdivision 840-M - Managed investment trust withholding tax  

Operative provisions

SECTION 840-805   Liability for managed investment trust withholding tax  

Liability

840-805(1)    
You are liable to pay income tax at the rate declared by the Parliament on the amount identified in subsection (2) , (3) or (4) as the fund payment part if that subsection applies to you.

Note 1:

The tax, which is called managed investment trust withholding tax, is imposed by the Income Tax (Managed Investment Trust Withholding Tax) Act 2008 and the rate of the tax is set out in that Act.

Note 2:

See Subdivision 12-H in Schedule 1 to the Taxation Administration Act 1953 for provisions dealing with withholding from fund payments, and Subdivision 12A-C in that Schedule for provisions dealing with obligations to pay the Commissioner amounts analogous to such withholding in relation to AMITs.

Note 3:

This subsection does not apply to residents of information exchange countries for the first income year starting on or after the first 1 July after the day on which the Tax Laws Amendment (Election Commitments No. 1) Act 2008 receives the Royal Assent. Subdivision 840-M of the Income Tax (Transitional Provisions) Act 1997 applies instead.

Payments from withholding MITs

840-805(2)    
This subsection applies to you if:

(a) you are paid an amount from a trust that is a *withholding MIT in relation to an income year, or an amount is applied or dealt with as you direct by such a trust; and

(b) all or part of that amount (the fund payment part ) is represented by a * fund payment in relation to that year; and

(c) you are, in respect of the fund payment part, a beneficiary (but not a beneficiary in the capacity of a trustee of another trust); and

(d) you are a foreign resident when you are paid the amount or when the amount is applied or dealt with as you direct.

Note 1:

Because a fund payment can be adjusted to account for earlier fund payments and the expected amounts of later fund payments (see subsection 12A-110(5) in Schedule 1 to the Taxation Administration Act 1953 ), the amount of a particular fund payment may not reflect the actual amount you are paid for the purposes of this subsection.

Note 2:

If the withholding MIT is an AMIT, under subsection 12A-205(2) in Schedule 1 to the Taxation Administration Act 1953 , amounts may be treated, for the purposes of this Subdivision, as having been paid to you from the trustee of the AMIT.

Payments from custodians

840-805(3)    
This subsection applies to you if:

(a) you are paid an amount from a * custodian, or an amount is applied or dealt with as you direct by a custodian; and

(b) all or part of that amount (the fund payment part ) is reasonably attributable to a * fund payment in relation to an income year by a trust that is a *withholding MIT in relation to that year; and

(c) you are, in respect of the fund payment part, a beneficiary (but not a beneficiary in the capacity of a trustee of another trust); and

(d) you are a foreign resident when you are paid the amount or when the amount is applied or dealt with as you direct; and

(e) either:

(i) the custodian is not a company; or

(ii) if it is a company, it would be acting in the capacity as your * agent apart from section 840-820 .

Note:

If the withholding MIT is an AMIT, under subsection 12A-205(5) in Schedule 1 to the Taxation Administration Act 1953 , amounts may be treated, for the purposes of this Subdivision, as having been paid to you from the custodian.

Entitlements to amounts from other entities

840-805(4)    
This subsection applies to you if:

(a) you are a beneficiary of a trust (that is not a *withholding MIT or a * custodian) and are presently entitled to a share of the income or capital of the trust; and

(b) all or part of that share (also the fund payment part ) is reasonably attributable to a payment that is a * fund payment in relation to an income year made by a trust that is a withholding MIT in relation to that year; and

(c) you are not, in respect of that share, a beneficiary in the capacity of a trustee of another trust; and

(d) you are a foreign resident at the time (the entitlement time ) when you became presently entitled.

Modification - foreign pension funds

840-805(4A)    

For the purposes of subsections (2), (3) and (4), if:

(a) the beneficiary, in respect of a fund payment part, is a beneficiary in the capacity of a trustee of another trust; and

(b) the beneficiary is a *foreign pension fund;

the foreign pension fund is taken, in respect of that fund payment part, to be a beneficiary in its own right, and not a beneficiary in the capacity of the trustee of another trust.

840-805(4B)    

Foreign pension fund means:

(a) an entity, the principal purpose of which is to fund pensions (including disability and similar benefits) for the citizens or other contributors of a foreign country, if:

(i) the entity is a fund established by an *exempt foreign government agency; or

(ii) the entity is established under a *foreign law for an exempt foreign government agency; or

(b) a *foreign superannuation fund that has at least 50 *members.

840-805(4C)    

If:

(a) a *foreign pension fund is liable to pay income tax on a fund payment part (a taxed part ) because of the operation of subsection (4A); and

(b) you are a beneficiary of the foreign pension fund and are presently entitled to a share of the income or capital of the foreign pension fund;

then, in working out for the purposes of paragraph (4)(b) whether all or part of that share is reasonably attributable to a payment that is a *fund payment, disregard the taxed part.

Modification - AMITs

840-805(4D)    

If the *managed investment trust mentioned in paragraph (2)(a), (3)(b) or (4)(b) is an *AMIT for the income year mentioned in that paragraph:

(a) if paragraph (2)(a) applies - disregard the phrase " (but not a beneficiary in the capacity of a trustee of another trust) " in paragraph (2)(c); or

(b) if paragraph (3)(b) applies - disregard the phrase " (but not a beneficiary in the capacity of a trustee of another trust) " in paragraph (3)(c); or

(c) if paragraph (4)(b) applies - disregard paragraph (4)(c).

840-805(4E)    

If:

(a) a trustee of a trust is liable to pay income tax on a fund payment part (a taxed part ) because of the operation of subsection (4D); and

(b) you are a beneficiary of the trust and are presently entitled to a share of the income or capital of the trust;

then, in working out for the purposes of paragraph (4)(b) whether all or part of that share is reasonably attributable to a payment that is a *fund payment, disregard the taxed part.

Entitlement to capital of a trust

840-805(5)    
For the purposes of this section, section 95A of the Income Tax Assessment Act 1936 applies in relation to capital of a trust in the same way as it applies to income of the trust.

Exception - Australian permanent establishments

840-805(6)    
This section does not apply to you if:

(a) you are paid the fund payment part, or it is applied or dealt with as you direct; or

(b) you become presently entitled to it;

in the course of a * business you carry on at or through an * Australian permanent establishment.

Exception - distributions on carried interests

840-805(7)    

Subsections (2) and (3) do not apply to you to the extent that the fund payment part:

(a) is included in your assessable income under subsection 275-200(2) (Gains etc from carried interests) for the income year because you hold or held a *CGT asset that carries an entitlement to a distribution mentioned in subsection 275-200(2) ; or

(b) would be so included if subsection 275-200(3) were disregarded.

840-805(8)    

Subsection (4) does not apply to you to the extent that the fund payment part:

(a) is attributable to an amount included in the net income of the trust mentioned in that subsection because of subsection 275-200(2) (Gains etc from carried interests) for the income year because the trust holds or held a *CGT asset that carries an entitlement to a distribution mentioned in subsection 275-200(2) ; or

(b) would be so included if subsection 275-200(3) were disregarded.

840-805(9)    

Subsections (2), (3) and (4) do not apply to you to the extent that the fund payment part relates to an amount that is *non-assessable non-exempt income of yours because of:

(a) Division 880 ; or

(b) Division 880 of the Income Tax (Transitional Provisions) Act 1997 .