The Australian government has proposed allowing certain managed investment trusts to apply capital gains tax (CGT) to apply to gains or losses from the disposal by a trust of shares, units and property.
Up to now, either CGT or revenue taxation applied to such transactions. Now CGT will apply as the "primary code" to a managed investment trust's disposal if the trust fulfils four conditions covering the eligibility of the trust and the assets disposed of, and that the disposal has been made by a trustee of the MIT who has made an irrevocable election to have CGT apply.
The government revealed its intentions first in the budget on May 12. The new regime is due to apply to the first income year beginning on or after the 2008-2009 fiscal year.
The measures will only cover certain MITs. Those that come under division 6C of the Income Tax Assessment Act cannot take advantage of the proposals.
The Treasury wants comments in particular from anyone concerning whether managed investment trusts that elect into new regime should be allowed to amend prior year returns to achieve the best result or the risk that MITs may have that the tax authorities may adjust prior year returns.
Anyone who wishes to comment on the proposals has until July 10 to do so to Raphael Ceccini at sbtr@treasury.gov.au
