House of Representatives

Explanatory Memorandum

(Circulated by the authority of the Minister for Small Business and Assistant Treasurer, the Hon Kelly O'Dwyer MP)

General outline and financial impact

A New Tax System for Managed Investment Trusts

The Tax Laws Amendment (New Tax System for Managed Investment Trusts) Bill 2015 and the supporting Bills amend the Income Tax Assessment Act 1997, the Taxation Administration Act 1953 and associated Acts to introduce a new tax system for managed investment trusts.

Date of effect: The new tax system for managed investment trusts applies to assessments for an income year starting on or after 1 July 2016. The trustee of a managed investment trust will be able to make an irrevocable choice to apply the new tax system for the 2015-16 income year in some circumstances.

The changes to extend the list of entities qualifying as eligible investors for the purpose of the widely held requirements apply on or after 1 July 2014.

Proposal announced: The proposal to introduce a new tax system for managed investment trusts was announced by the former government in the then Assistant Treasurer's Media Release of 7 May 2010.

The former Treasurer announced that the Commonwealth Government would proceed with this measure in the Treasurer's Media Release of 6 November 2013.

Financial impact: This measure has the following revenue implications:

Human rights implications: This Bill does not raise any human rights issue. See Statement of Compatibility with Human Rights - Chapter 11.

Compliance cost impact: This measure will increase certainty, reduce complexity and minimise compliance costs for managed investment trusts and their investors. Total compliance costs are expected to be reduced by $30 million per year.