The Government will amend the income tax laws to ensure legitimate investors can continue to access concessional withholding tax rates in Australia while strengthening guidelines to prevent misuse.
This targeted policy change reaffirms that genuine, foreign based widely‑held investors, such as pension funds, can still access concessional withholding tax rates on eligible distributions to members through managed investment trusts (MITs).
The amendments will maintain current industry practice and understanding of the operation of the managed investment trust pooling requirements under Division 275 of the Income Tax Assessment Act 1997 and remove ambiguity around the use of MITs.
The amendments will make clear that trusts ultimately owned by a single widely‑held investor (e.g. a foreign pension fund) are able to access the MIT concessions.
This measure will complement a tax alert issued by the Australian Taxation Office on Friday 7 March. TA 2025/1 makes clear that the ATO will take enforcement action where taxpayers engage in non‑commercial restructures to inappropriately access MIT withholding tax benefits. The amendments will not affect the ATO's power to take action using the General Anti‑Avoidance Rules (GAAR) in Part IVA of the Income Tax Assessment Act 1936 where 'captive MITs' involve other characteristics of the kind set out in the tax alert.
This measure goes alongside other actions the Government is taking to attract foreign investment by making the process more streamlined and transparent. This will apply to fund payments from today.
