Legislative changes impacting capital gains of Managed Investment Trusts
Attribution managed investment trusts
For 2016 and later income years, a managed investment trust (MIT) may be able to choose to apply the attribution rules contained within a specific tax system for MITs as set out in Division 276 of the Income Tax Assessment Act 1997. Where that choice is made, the MIT becomes an attribution managed investment trust (AMIT).
Generally, these rules apply to 'attribute' amounts for tax purposes to each member based on their interest in the AMIT, rather than the member being taxed based on their 'present entitlement' to the income of the trust.
The attribution rules ensure that, for tax purposes, amounts attributed to you by the trust:
- keep their tax character
- flow through to you, and
- are treated as if you had received the amount directly in your own right (though in the same circumstances as received by the AMIT).
In relation to capital gains, these rules mean you will treat the capital gains component of your trust income as being a capital gain that you made.
The share of trust amounts attributed to you is shown on your member statement, which for an AMIT is called an AMIT member annual statement (AMMA statement) (similar to the standard distribution statement provided by a managed fund).
Otherwise, for members (unitholders) of an AMIT, there should be little practical difference to the way trust capital gains are included in your tax return.
In addition, the cost base of your units in an AMIT may also be subject to annual upward or downward adjustments (see Cost base adjustments for AMIT members).
For more information, see Managed investment trusts.
Streaming
In June 2011, amendments were enacted that allow the streaming of capital gains and franked dividends to beneficiaries, subject to relevant integrity provisions.
The amendments apply from 2017–18 to managed investment trusts (MITs) which have not previously made an election to apply the amendments. For MITs which have previously made an election to apply the amendments, the amendments continue to apply in 2017–18 and onwards.
The amendments do not apply to attribution managed investments trusts (AMITs), which are subject to the separate attribution rules that enable capital gains and franked distributions to be attributed to members for tax purposes.