The Australian managed investment trust (MIT) sector is expected to see significant growth in the year ahead after the federal government implemented further amendments to the MIT rules last year, according to the Trust Company.
“The reforms should boost the global competitiveness of the Australian tax regime and help attract more foreign investors to Australia,” Trust general manager of business development Andrew Cannane said.
“Previously, Australia’s tax arrangements made it relatively uncompetitive and more difficult to attract foreign investment and fund managers to set up in Australia.
“With the new arrangements, we are better positioned to promote Australia as an investment destination as well as a location to set up a regional fund management presence.”
The Trust Company estimated local MITs had assets under management of over $2 billion, but that figure could easily grow to $3.5 billion by the end of the calendar year.
“We have seen the demand for MIT transactions rise as the reforms have made it more attractive to invest in Australia,” Cannane said.
“Over the past 12 months, we have seen a marked increase in the number of international fund managers that need our help to facilitate the structuring of MITs for their purchase of commercial, retail and hotel properties.
“We believe this growth will only increase given the greater competiveness of the Australian tax regime.”
The government implemented further changes to the MIT rules in May and July 2010.
From 1 July 2010, MIT trustees would have to apply the withholding tax/capital gains tax rules when the trust is paying taxable distributions or disposing of eligible assets.
Withholding tax paid on distributions for eligible MITs was also reduced to 7.5 per cent.
