Review of taxation of managed investment trusts underway
The Investment and Financial Services Association (IFSA) has welcomed the Board of Tax’s initial discussion paper around the review of the tax arrangements applying to managed investment trusts.
IFSA said the creation of a “clear and efficient” tax regime for managed investment trusts is critical in establishing Australia as an international financial centre.
The Board of Tax paper said in order for the Australian managed funds industry to be able to continue to grow and develop its export potential, its tax arrangements must not create “unnecessary or unintended barriers to investment in Australian managed funds”.
IFSA chief executive Richard Gilbert said the draft paper “comprehensively identifies” the taxation issues affecting managed investment trusts, adding the draft paper would form a good platform for policy development.
Australia’s taxation law doesn’t contain a specific regime for the taxation of managed investment trusts, with only the original legislation for taxing trusts applying.
“To date, there has been no systematic approach to adapt the law to align it with modern practice and the use of trusts as commercial investment vehicles,” the paper said.
“The result is taxation legislation that is piecemeal and often uncertain in its application.”
The board will now review the tax arrangements applying to managed investment trusts and assess options for introducing a specific tax regime that would reduce complexity, increase certainty and minimise compliance costs.
The review is expected to be completed by the middle of 2009.
Gilbert said IFSA welcomed confirmation that the Assistant Federal Treasurer, Chris Bowen, has asked the Board of Tax to urgently deal with the issue of capital versus revenue account treatment of assets held in managed investment trusts.
“IFSA considers that the Board of Tax is the appropriate forum to deal with this important policy issue,” Gilbert said.
He praised the Rudd Government for continuing to pursue the agenda of making Australia an international financial centre for the Asia-Pacific region, despite the volatile and uncertain environment for financial markets.
The board is inviting written submissions to assist with its review. The closing date for submissions is December 19, 2008.
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