The Australian government has announced that it will be relaxing managed investment trust (MIT) rules weeks after new legislation was introduced to parliament.
Although the terms of the amendments have not yet been released, it is expected that they will address a number of concerns in the original bill.
A press release today explained that the government intends to amend the Tax Laws Amendment (2010 Measures No. 3) Bill, a Bill that was only passed to parliament at the end of May.
The release of the bill generated significant concerns and issues for the fund management industry as they appeared to significantly restrict and create uncertainty regarding the availability of MIT concessions.
The press release indicates that it will limit the Australian investment management requirement that was contained in the bill. This will now only be applied to Australian assets and it will require a "substantial proportion" of the relevant investment activities for the trust to be conducted in Australia.
It is anticipated that full details of the amendments will be available later this week.
The government's release also outlined that a number of other amendments will be made to the bill. Concessional tracing rules will be extended to all wholesale funds as well as reducing the widely-held requirement for such funds from 30 to 25 members.
Start-up trusts will be granted an 18-month period during which they can qualify as a MIT before meeting the widely-held requirements.
Also, the list of institutional investors under the MIT rules that may receive concessional treatment will be expanded to include foreign government pension plans, sovereign wealth funds, certain government agencies and foreign equivalents of a managed investment scheme.
"These proposed amendments all appear to be more favourable than the previous bill," said Andrew Clements of Mallesons Stephens Jaques. "They may go a long way in addressing some of the anomalies that arose under the previous bill."
Meanwhile, the parliament has passed legislation that will see improvements to the administration of the goods and services tax (GST). The legislation will allow entities to self-assess their eligibility to form and make changes to a GST group or joint venture and to do so at any time during a tax period. Clearer and more flexible rules for tax invoices will also be introduced. All of the new GST measures will apply from July 1 2011.
It was also stated that there would be considerable benefits by bringing GST and other indirect taxes into the general tax ruling system as the present arrangements were criticised by professionals for producing a degree of uncertainty and inflexibility.
"I welcome the passage of this legislation as it reduces compliance costs for taxpayers and clarifies a number of areas which have been of concern to the business community," said Nick Sherry, Australia's assistant treasurer.
For full details of the amendments, follow www.internationaltaxreview.com.
