This article appeared in the March 2008 Listed@ASX email newsletter. To subscribe to this newsletter please register with the MyASX section or visit the About MyASX page for past editions and more details.

Distributions announced by Managed Investment Trusts

Taxation Administration Act 1953 Subdivision 12-H

A Companies Update was released on 20 December 2007 and ASX once again encourages listed trusts to have regard to these matters when announcing distributions.

  • The Australian Custodial Services Association (ACSA) has advised ASX that:
    Legislative changes which came into effect on 1 July 2007 have impacted the withholding tax arrangements for non-resident investors of managed investment trusts. 
  • In order for custodians holding units on behalf of non-resident investors to apply an appropriate rate of non-resident withholding tax, trusts should look to release two key pieces of information prior to the distribution payable date:
    1. a statement that the trust complies with the legislation and in particular that it is a managed investment trust for the purposes of Sub-division 12-H of the Taxation Administration Act 1953 for the particular year of income; and 
    2. a statement clearly identifying each of the individual taxation components that collectively total to the distribution rate.
  • If a trust does not state compliance to Sub-division 12H on the distribution notice and does not issue any component information, custodians are required to deduct non-resident withholding tax over the entire distribution at a rate of 45%.
ACSA has written to ASX listed trusts to alert them to this issue, and has circulated a sample statement.

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