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Australia: Exposure draft legislation regarding foreign pension funds and access to the MIT

Tuesday, 07 October 2014   (0 Comments)
Posted by: Author: Peter Collins
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Authors: Peter Collins and David Earl (PwC Australia)

The Australian Commonwealth Treasury has released exposure draft legislation which proposes that certain foreign pension funds will be able to access the Managed Investment Trust (MIT) withholding regime and the associated lower rate of withholding tax (WHT) on their Australian investments.

As presently drafted, the regime has been limited to entities established by or for foreign governments and their agencies. A foreign pension fund (as a foreign beneficiary or foreign custodian of a trust) may not access the MIT withholding regime in certain circumstances, meaning that the fund may be liable to tax under the general ‘trust’ provisions and may be taxed at the highest marginal tax rate.

The amendments are proposed to retrospectively apply to income years commencing on or after July 1, 2008. The Australian Commonwealth Treasury is currently consulting with industry and key stakeholders on this draft legislation.

PwC observation:

The retrospective nature of these amendments is to ensure that affected foreign pension funds can access the MIT withholding regime as originally intended. PwC expects that the limitation on the scope of the amendments will be at the centre of submissions and consultation with the government.

This article first appeared on

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