When investments are made through an intermediary, such as a solicitor or mortgage scheme, the intermediary is known as an interposed entity.
AIIR responsibilities
An interposed entity notionally has the same reporting responsibilities as any investment body. However, the interposed entity may nullify these responsibilities by providing the details of the primary investor to the secondary investment body. Otherwise, the interposed entity must assume full reporting responsibility.
TFN/ABN quotation rules
If an interposed entity invests the funds of the primary investor in an investment (secondary investment) with another investment body (secondary investment body), the TFN/ABN quotation rules are as follows:
- if not all of the primary investors are identified in the title of the secondary investment with the secondary investment body, the interposed entity is allowed to quote its own TFN/ABN to the secondary investment body
- if all of the primary investors are identified in the title of the secondary investment, the primary investor (or at least one of the primary investors if there is more than one) may quote their TFN/ABN directly to the secondary investment body.
Where (b) applies, the interposed entity is taken not to be an investment body in relation to the secondary investment and must not quote their TFN/ABN.
Reporting by the secondary investment body
If the details of the investor, including the TFN/ABN, are passed on by the interposed entity to the secondary investment body, the secondary investment body takes on the reporting responsibility for any income paid on the investments of that client. As well as the investor's information, the secondary investment body should record the name and ABN of the interposed entity in the fields supplied on the AIIR.
Unit trusts
Unit trusts are not interposed entities. The unit trust is an investment body in its own right and issues statements relating to interest and other forms of income paid as a result of the investment.
If you make investments with an investment body on behalf of another investor or group of investors you may be acting in the role of an interposed entity. Interposed entities don't need to provide an Annual investment income report to the ATO if certain conditions are met.