Managed Investment Trusts – the industry perspective, a legal standpoint.

Managed Investment Trusts (MITs) are the investment vehicle of choice, supporting Australia’s $2.59 trillion funds management industry [1].

The proposed new tax regime for MITs, introduced into Parliament on 3 December 2015, is the third and most complex tranche of reforms affecting the taxation of MITs.

What follows is a short introduction to the paper Kos Dimitriou, CTA, and Vivian Chang, CTA are due to present at the Financial Services Conference being held on 17-19 February 2016.

The significance of these new measures should not be underestimated. The proposed law is complex and will fundamentally change the way qualifying Managed Investment Trusts (AMITs) and their investors are taxed. Favourable changes are also made to the Division 6C public trading trust (PTT) rules as well as repealing the Division 6B public unit trust (PUT) rules.

Specifically, the AMIT regime is intending to significantly simplify the administration of MITs, whilst at the same time providing certainty and creating additional functionality for MITs, thereby enabling the creation of new product opportunities, the minimisation of current operational risks and costs.

The introduction of the AMIT regime is welcomed by the industry and another small yet significant step in the Government’s commitment to secure Australia’s future as a leading financial services centre that will promote the greater export of Australia’s funds management expertise and enhance the competitiveness of Australia's funds management industry. As articulated in the Johnson report, such an aspirational status must be progressively achieved, as capital is increasingly becoming mobile, resulting in increased competition for foreign capital.

The development of this regime has been a success due to the close consultation and high level commitment between Treasury, ATO and industry through various changes in Government.

However, it should be noted that because the proposed law has been developed using the principles based approach to drafting, it will require on-going commitment and review by Treasury, the ATO and industry to ensure that we collectively:
  • avoid the repeat of the Division 6 uncertainty;
  • efficiently implement the regime;
  • work with ASIC to develop broad class order relief, in instances where changes to constitutions are required, to ensure we do not allow mere compliance, but rather the development of new products and simplification of the industry; and
  • ensure that the AMIT remains a stable regime, thereby ensuring the industry’s on-going growth, particularly in attracting foreign capital. 
In their presentation, Kos Dimitriou, CTA, and Vivian Chang, CTA will seek to:
  • Provide the background and context of the proposed AMIT regime; 
  • Articulate the key features of the proposed AMIT regime;
  • Outline practical implications that should be considered as fund managers, custodians, fund administrators and other service providers formulate an action plan to implement the AMIT regime; and
  • Explore product opportunities that may arise out of this new tax regime as Australia transitions into a services based economy, and seeks to gain the aspirational status as the financial services hub of the Asia Pacific region.
Kos Dimitriou, CTA, is a tax business partner at NAB, where he focuses on mergers and acquisitions, international tax and funds management. Kos has extensively advised NAB’s Asset Management business units, including Investment Committees, Trustee Boards and a range of industry bodies, on a range of investments, including property, infrastructure, global private equity and global fund of hedge funds.

Vivian Chang, CTA, is a tax partner at Ashurst (formerly known as Blake Dawson), where she focuses on the Australian and international tax aspects of corporate and financial services transactions, specialising in the areas of mergers, acquisition and reorganisations, financial products and funds management.

To to get up to speed with the new proposed regime, and many other leading topics, join us at the Financial Services Conference, 17-19 February 2016 at the Marriott Resort & Spa, 
Surfers Paradise.



[1] ABS 5655 – Managed Funds, Australia, September 2015, Released at 11:30 AM (CANBERRA TIME) 26/11/2015

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