The fund manager has cautiously welcomed Treasury’s draft legislation that seeks to “modernise the tax rules for eligible MITs”.
In its submission on the proposed reforms, One Investment Group executive director Justin Epstein said the changes present both “opportunities and concerns”.
Mr Epstein warned that the timing of transitional arrangements, financial costs and unintended consequences need further discussion.
According to Mr Epstein, the introduction of a trustee administrative penalty, while intended to protect investors, might result in higher administration costs.
“Whilst the proposed administrative penalty is seen by the legislature as ‘consistent’ with other penalties imposed on individual taxpayers for tax shortfalls, it is noted that the circumstances affecting individual taxpayers versus attribution MIT (AMIT) trustees are not the same.
“In this regard, it cannot be said that the motivations of an individual taxpayer in managing their tax affairs is in any way consistent with that of a trustee in performing its contractual and legal obligations in managing the tax affairs of the AMIT,” said Mr Epstein.
One Investment Group said that the firm is not opposed to an administrative penalty, but further guidance is needed to provide trustees and investors with clarity over their potential exposure.
Mr Epstein has called for a class order relief by the Australian Securities and Investments Commission.
“We respectfully submit that the introduction of the changes by the Bill be accompanied by the granting of class order relief by ASIC to relieve trustees from the requirement to obtain member approval to amend a trust’s constitution in order to qualify as an AMIT.
“It is our view that this approach would be more favourable, in terms of uncertainty, time and financial costs, than requiring trustees to seek the exercise of the Commissioner of Taxation’s discretion to treat an MIT as having “clearly defined” interests,” he said.
Mr Epstein also suggested that some components of the new regime only apply to assessments for income years starting on or after 1 July 2016 rather than 1 July 2015.
