Potential extension for amending your trust deed for the AMIT regime - must read!

By Alexis Kokkinos - June 15, 2016

Following the recent passing of the Attribution Managed Investment Trust (AMIT) legislation, the ATO is anticipated to afford an extension of time (to 31 August 2016) for Funds who are electing into the regime from 1 July 2016 to make necessary modifications to trust constituent documents in order to satisfy the clearly defined rights limb of the AMIT definition. In order to access the AMIT regime from 1 July, it is critical to consider this and act now!

A. Why is an extension of time required?

In order to be eligible to elect into the AMIT regime, a qualifying Fund must be one where the investors have “clearly defined” rights to income and capital. Generally, where an existing managed investment scheme is unregistered (i.e. typical of wholesale managed funds), the ability to satisfy the clearly defined rights limb will depend on the rights of investors under the trust constituent documents (i.e. trust deed).  The legislation as enacted requires that there must be clearly defined rights at all times during an income year for a Fund to be an AMIT. This will mean that Funds must make necessary trust deed amendments prior to 1 July 2016 to allow the Fund the flexibility of being able to elect into the AMIT regime for the 30 June 2017 income year.

Pitcher Partners identified this timing issue and placed a request for an extension of time with the ATO late last week. We have been working with the ATO on an administrative solution that may allow an extension of time for Funds who modify or replace relevant documents on or after 1 July and before 31 August 2016.

It is anticipated that the ATO will imminently confirm the extension of time through the issue of a draft Practical Compliance Guideline publication. 

B. What are my next steps?

Irrespective of whether your wholesale fund is expecting to adopt the AMIT regime, you should immediately perform an assessment of the trust constituent documents in light of the clearly defined rights requirements.  This will at least allow amendments to be adopted now, so that the relevant fund will have flexibility for considering the AMIT regime later in the 30 June 2017 income year.  If this issue is not acted on, the earliest entry time would be 1 July 2017 (provided the trust deed has been amended before that date).  Remember, if the fund is a property fund, holds dutiable property or has substantial unrealised gains, you will also need to consider resettlement issues within this time frame.

Given the time critical nature of this issue, we recommend that you contact us as a matter of priority to ensure any risks are managed immediately and that the amendments are appropriate for the AMIT regime. 

Pitcher Partners have extensive experience in reviewing and assessing trust constituent documents for the purposes of AMIT eligibility and would be pleased to assist you.  We have also been working with a number of legal firms in assisting with AMIT amendments.

To access further information in regards to the AMIT legislation including key features, application to investment funds and new product opportunities, refer to our Tax Alert in December 2015 (New Tax Rules for Funds Providing Growth Opportunities) and Tax Alert in May 2016 (The New Managed Investment Trust Regime is Here – Are you ready?).

For a more comprehensive discussion on how we can assist you in determining the status of your trust constituent documents in light of the clearly defined rights requirements, please contact either Alexis Kokkinos (03 8610 5170) or Brenton Chan (03 8612 9570) or alternatively please contact your Pitcher Partners advisor. 

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