New Bill introduced
As foreshadowed by the Assistant Treasurer on Wed 20.6.2012, a separate Bill was introduced to double the withholding tax rate on Managed Investment Trusts (MITs).
The Tax Laws Amendment (Managed Investment Trust Withholding Tax) Bill 2012 was introduced in the House of Reps on Thur 21.6.2012. It proposes to make consequential amendments to the Taxation Administration Act 1953 to give effect to the increase in the MIT final withholding tax rate imposed by the Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2012. That Bill proposes to amend the Income Tax (Managed Investment Trust Withholding Tax) Act 2008 to increase the MIT final withholding tax from 7.5% to 15% on fund payments made in relation to income years that commence on or after 1 July 2012. This was announced in the 2012-13 Federal Budget.
DATE OF EFFECT: The amendments are proposed to apply from 1 July 2012.
[LTN 118, 21/6]
Committee Reports on Bill
The House of Reps Standing Committee on Economics on Mon 25.6.2012 tabled its advisory report on the Tax Laws Amendment (Managed Investment Trust Withholding Tax) Bill 2012. The Bill proposes to double the withholding tax rate to 15% on MITs. The Committee recommended the House pass the Bill, although Liberal Members of the Committee issued a dissenting report.
[LTN 120, 25/6]
Bills pass the Lower House
The Tax Laws Amendment (Managed Investment Trusts Withholding Tax) Bill 2012 and the Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2012 were both passed by the House of Reps late on Tue 26.6.2012, without amendment and now move to the Senate.
[LTN 122, 27/6]
Green’s deal in Senate allows increased MIT withholding tax to pass – lower rate for MIT’s invested in Green buildings
The Assistant Treasurer has announced that the Government secured Parliamentary support from the Greens for the Senate to pass the Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2012 and the Tax Laws Amendment (Managed Investment Trust Withholding Tax) Bill 2012 in return for incentives to invest in energy efficient commercial buildings. The Government agreed to introduce subsequent legislation to support investment in the construction of new energy efficient buildings.
The changes, if implemented, would effectively create a 2-tier withholding tax regime for MITs.
From 1 July 2012, the Government proposes that MITs that only hold newly constructed energy efficient commercial buildings will be eligible for a 10% withholding tax rate, instead of 15%. The concession would be available in relation to office buildings that have obtained a 5-star Green Star rating or a predicted 5.5 star National Australian Built Energy Ratings Scheme (NABERS) rating, and retail centres and non-residential accommodation that meet equivalent standards.
The new regime would apply where construction of the building commences after 1 July 2012. The Department of Climate Change and Energy Efficiency would administer the eligibility requirements, and monitor investment outcomes.
The Government said it would seek to introduce and pass the relevant legislation in its Spring sittings of Parliament, scheduled to run from 14 August to 29 November 2012. There will be industry consultation about the design of the scheme. The eligibility criteria will be reviewed after 3 years to ensure they are selecting projects that are above the average level of energy efficiency.
[LTN 123, 28/6]
Bills passed – withholding rate doubled
The Tax Laws Amendment (Managed Investment Trust Withholding Tax) Bill 2012 and the associated Income Tax (Managed Investment Trust Withholding Tax) Amendment Bill 2012 have now passed all stages without amendment and await Royal Assent. As noted above, the Government did a deal with the Greens to get the legislation passed that will double the withholding tax rate from 7.5% to 15% in return for a commitment from the Government to introduce legislation to provide incentives (including withholding rate incentives) to invest in energy efficient commercial buildings.
[LTN 124, 29/6]