The proposed amendments, first announced by the Coalition government on 6 November 2013, will ensure foreign investment funds will be able to access the MIT withholding regime “and the associated lower rate of withholding tax on income from certain Australian investments”.
According to Treasury’s explanatory documents, the liability for MIT withholding tax is imposed on foreign residents in respect of the fund payments they receive either directly or indirectly from a MIT.
“However, under the current law, the concessional MIT withholding tax does not apply in circumstances where an ultimate beneficiary cannot be established,” said Treasury.
“This will occur where fund payments are made to a trust without presently entitled beneficiaries,” it said.
Under the amended law, foreign pension funds will be treated as the final beneficiary of a fund payment and will be liable for MIT withholding tax.
The closing date for submissions on the consultation process is 8 August 2014.
