The Corporate Collective Investment Vehicle Framework and Other Measures Act 2022External Link establishes the regulatory and tax frameworks for corporate collective investment vehicles (CCIVs).
A CCIV is:
- a new type of company limited by shares that is used for funds management
- an umbrella vehicle that is comprised of one or more sub-funds and is operated by a single corporate director.
A sub-fund of a CCIV is all or part of the CCIV’s business that is registered as a sub-fund of the CCIV by ASIC
The CCIV tax framework leverages the existing trust taxation framework and the existing attribution flow-through regime (that is, the new tax system for Managed investment trusts (MITs), or the Attribution managed investment trust (AMIT) regime), rather than by creating a new bespoke tax regime. The general intent of the tax framework is that the tax outcomes for an investor in a CCIV sub-fund will be the same as an investor in an AMIT.
Subdivision 195-C of the Income Tax Assessment Act 1997 (ITAA 1997) provides that for taxation purposes, a trust relationship is deemed to exist between a CCIV, the business, assets and liabilities referable to a sub-fund and the relevant class of members.
- Each sub-fund is treated as a separate unit trust (known as the ‘CCIV sub-fund trust’) with the CCIV as trustee and members of the CCIV as beneficiaries of the CCIV sub-fund trust, in accordance with their shareholding that is referable to the sub-fund.
- Under the deeming principle, all taxation laws apply to the CCIV, sub-fund and members in their deemed capacities, unless expressly excluded.
The CCIV tax regime includes the following features:
- A CCIV sub-fund trust that satisfies the AMIT eligibility requirements in Division 276 of the ITAA 1997 for an income year will be treated as an AMIT for that year
- for income tax purposes, amounts derived or received by a CCIV sub-fund trust that are attributed to members generally retain the character they had in the hands of the trustee of the CCIV sub-fund trust
- CCIV sub-fund trusts are deemed to be fixed trusts and members are taken to have a vested and indefeasible interest in a share of the income and capital of the trust
- the CCIV sub-fund trust is able to use the ‘unders’ and ‘overs’ regime to reconcile a variance in calculating trust components of particular characters for an income tax year in the income year that the variance is discovered.
- If a CCIV sub-fund trust fails to meet the AMIT eligibility requirements in Division 276 of the ITAA 1997, it will be taxed in accordance with the general trust provisions including where the trust is taxed as a public trading trust under Division 6C of Part III of the ITAA 1936.
- Adjustments may be made to decrease or increase the cost base of members' unit holdings in CCIV sub-funds that are deemed to be an AMIT to eliminate double taxation that may otherwise arise.
- CCIV sub-funds that are deemed to be AMITs are subject to an arm’s length rule that aims to ensure that related entities undertake transactions between one another in a manner that reflects commercial dealings.
Continue to: Features of this tax return