A managed investment trust (MIT) is a type of unit trust in which members of the public collectively invest in passive income activities, such as shares, property or fixed interest assets. A trust qualifies as a MIT if it meets certain requirements for the income year it is in operation.
MITs (and their members) are generally taxed under the trust provisions in Division 6 of the Income Tax Assessment Act 1936. Under these provisions, beneficiaries are generally taxed on their share of the net income of a trust or the trustee is taxed on their behalf, based on the ‘present entitlement’ of beneficiaries to trust income.
On 5 May, 2016, the government enacted changes to the taxation of MITs. Eligible MITs may elect to apply the new rules for an income year starting on or after 1 July 2015. Once a MIT elects in, the trust provisions in Division 6 will no longer apply to that MIT. MITs that elect into the new regime are referred to as attribution managed investment trusts (AMITs) and are generally taxed under Division 276 of the Income Tax Assessment Act 1997.
The new tax system also introduces changes for MITs generally, including amendments to the rules around withholding, non-arm’s length income, and the 20% tracing rule in Division 6C.
Find out about:
- Eligibility requirements
- Attribution managed investment trusts (AMITs)
- Withholding rules
- Arm’s length income rule
- 20% tracing rule in Division 6C
- Capital treatment elections
- Application and transitional provisions for the new tax system for MITs
- How we apply the law
- Our compliance approach
[ATO information released] [LTN 87, 9/6/15]