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Income Tax Assessment Act 1997

Authoritative Version
  • - C2019C00113
  • In force - Superseded Version
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Act No. 38 of 1997 as amended, taking into account amendments up to Treasury Laws Amendment (Protecting Your Superannuation Package) Act 2019
An Act about income tax and related matters
Administered by: Treasury
General Comments: Division 40, Subdivision 40-D, Section 40-340, Subdivision 328-G and Sections 328-430 and 328-450 of this Act have been modified by the operation of the Commissioner’s Remedial Power, click here to see the modification
Registered 21 Mar 2019
Start Date 13 Mar 2019
End Date 31 Mar 2019

Commonwealth Coat of Arms of Australia

Income Tax Assessment Act 1997

No. 38, 1997

Compilation No. 191

Compilation date:                              13 March 2019

Includes amendments up to:            Act No. 16, 2019

Registered:                                         21 March 2019

This compilation is in 12 volumes

Volume 1:       sections 1‑1 to 36‑55

Volume 2:       sections 40‑1 to 67‑30

Volume 3:       sections 70‑1 to 121‑35

Volume 4:       sections 122‑1 to 197‑85

Volume 5:       sections 200‑1 to 253‑15

Volume 6:       sections 275‑1 to 313‑85

Volume 7:       sections 315‑1 to 420‑70

Volume 8:       sections 615‑1 to 721‑40

Volume 9:       sections 723‑1 to 855‑55

Volume 10:     sections 900‑1 to 995‑1

Volume 11:     Endnotes 1 to 3

Volume 12:     Endnotes 4 and 5

Each volume has its own contents

 

About this compilation

This compilation

This is a compilation of the Income Tax Assessment Act 1997 that shows the text of the law as amended and in force on 13 March 2019 (the compilation date).

The notes at the end of this compilation (the endnotes) include information about amending laws and the amendment history of provisions of the compiled law.

Uncommenced amendments

The effect of uncommenced amendments is not shown in the text of the compiled law. Any uncommenced amendments affecting the law are accessible on the Legislation Register (www.legislation.gov.au). The details of amendments made up to, but not commenced at, the compilation date are underlined in the endnotes. For more information on any uncommenced amendments, see the series page on the Legislation Register for the compiled law.

Application, saving and transitional provisions for provisions and amendments

If the operation of a provision or amendment of the compiled law is affected by an application, saving or transitional provision that is not included in this compilation, details are included in the endnotes.

Editorial changes

For more information about any editorial changes made in this compilation, see the endnotes.

Modifications

If the compiled law is modified by another law, the compiled law operates as modified but the modification does not amend the text of the law. Accordingly, this compilation does not show the text of the compiled law as modified. For more information on any modifications, see the series page on the Legislation Register for the compiled law.

Self‑repealing provisions

If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.

  

  

  


Contents

Chapter 3—Specialist liability rules                                                           1

Part 3‑25—Particular kinds of trusts                                                                         1

Division 275—Australian managed investment trusts: general             1

Guide to Division 275                                                                                                1

275‑1..................... What this Division is about................................................. 1

Subdivision 275‑A—Meaning of managed investment trust                           2

Guide to Subdivision 275‑A                                                                                     2

275‑5..................... What this Subdivision is about........................................... 2

Operative provisions                                                                                                 2

275‑10................... Meaning of managed investment trust................................ 2

275‑15................... Trusts with wholesale membership..................................... 6

275‑20................... Widely‑held requirements—ordinary case.......................... 6

275‑25................... Widely‑held requirements for registered MIT—special case for entities covered by subsection 275‑20(4).......................................................................................... 10

275‑30................... Closely‑held restrictions................................................... 11

275‑35................... Licensing requirements for unregistered MIS................... 12

275‑40................... MIT participation interest.................................................. 13

275‑45................... Meaning of managed investment trust—every member of trust is a managed investment trust etc.         13

275‑50................... Extended definition of managed investment trust—no fund payment made in relation to the income year.......................................................................................... 14

275‑55................... Extended definition of managed investment trust—temporary circumstances outside the control of the trustee.......................................................................................... 15

Subdivision 275‑B—Choice for capital treatment of managed investment trust gains and losses            15

275‑100................. Consequences of making choice—CGT to be primary code for calculating MIT gains or losses            16

275‑105................. Covered assets.................................................................. 19

275‑110................. MIT not to be trading trust................................................ 19

275‑115................. MIT CGT choices............................................................. 20

275‑120................. Consequences of not making choice—revenue account treatment            21

Subdivision 275‑C—Carried interests in managed investment trusts         22

275‑200................. Gains and losses etc. from carried interests in managed investment trusts reflected in assessable income or deduction.......................................................................... 22

Subdivision 275‑L—Modification for non‑arm’s length income                 24

Guide to Subdivision 275‑L                                                                                   24

275‑600................. What this Subdivision is about......................................... 24

Operative provisions                                                                                               25

275‑605................. Trustee taxed on amount of non‑arm’s length income of managed investment trust                25

275‑610................. Non‑arm’s length income................................................. 26

275‑615................. Commissioner’s determination in relation to amount of non‑arm’s length income   28

Division 276—Australian managed investment trusts: attribution managed investment trusts               30

Guide to Division 276                                                                                              30

276‑1..................... What this Division is about............................................... 30

Subdivision 276‑A—What is an attribution managed investment trust?   31

Guide to Subdivision 276‑A                                                                                   31

276‑5..................... What this Subdivision is about......................................... 31

Operative provisions                                                                                               32

276‑10................... Meaning of attribution managed investment trust (or AMIT32

276‑15................... Clearly defined interests.................................................... 33

276‑20................... Trust with classes of membership interests—each class treated as separate AMIT  33

Subdivision 276‑B—Member’s vested and indefeasible interest in share of income and capital of AMIT             34

Guide to Subdivision 276‑B                                                                                   34

276‑50................... What this Subdivision is about......................................... 34

Operative provisions                                                                                               35

276‑55................... AMIT taken to be fixed trust and member taken to have vested and indefeasible interest in income and capital.......................................................................................... 35

Subdivision 276‑C—Taxation etc. of member components                          35

Guide to Subdivision 276‑C                                                                                   35

276‑75................... What this Subdivision is about......................................... 35

Taxation etc. of member on determined member components                    36

276‑80................... Member’s assessable income or tax offsets for determined member components—general rules            36

276‑85................... Member’s assessable income or tax offsets for determined member components—specific rules           38

276‑90................... Commissioner’s determination as to status of member as qualified person              39

276‑95................... Relationship between section 276‑80 and withholding rules 40

276‑100................. Relationship between section 276‑80 and other charging provisions in this Act      41

Foreign resident members—taxation of trustee and corresponding tax offset for members     42

276‑105................. Trustee taxed on foreign resident’s determined member components      42

276‑110................. Refundable tax offset for foreign resident member—member that is not a trustee   44

Special rule for interposed custodian                                                                  44

276‑115................. Custodian interposed between AMIT and member........... 44

Subdivision 276‑D—Member components                                                         45

Guide to Subdivision 276‑D                                                                                   45

276‑200................. What this Subdivision is about......................................... 45

Member‑level concepts                                                                                           46

276‑205................. Meaning of determined member component.................... 46

276‑210................. Meaning of member component....................................... 48

Subdivision 276‑E—Trust components                                                              50

Guide to Subdivision 276‑E                                                                                   50

276‑250................. What this Subdivision is about......................................... 50

Trust‑level concepts                                                                                                 50

276‑255................. Meaning of determined trust component.......................... 50

276‑260................. Meaning of trust component............................................. 51

276‑265................. Rules for working out trust components—general rules... 52

276‑270................. Rules for working out trust components—allocation of deductions         52

Subdivision 276‑F—Unders and overs                                                                53

Guide to Subdivision 276‑F                                                                                    53

276‑300................. What this Subdivision is about......................................... 53

Adjustment of trust component for unders and overs etc.                              54

276‑305................. Adjustment of trust component for unders and overs....... 54

276‑310................. Rounding adjustment deficit increases trust component.... 55

276‑315................. Rounding adjustment surplus decreases trust component. 55

276‑320................. Meaning of trust component deficit.................................. 56

276‑325................. Trust component of character relating to assessable income—adjustment for cross‑character allocation amount, carry‑forward trust component deficit and FITO allocation amount         56

276‑330................. Meaning of cross‑character allocation amount and carry‑forward trust component deficit   58

276‑335................. Meaning of FITO allocation amount................................ 58

276‑340................. Trust component character relating to tax offset—taxation of trust component deficit             59

Unders and overs                                                                                                      60

276‑345................. Meaning of under and over of a character........................ 60

276‑350................. Limited discovery period for unders and overs................. 61

Subdivision 276‑G—Shortfall and excess taxation                                         61

Guide to Subdivision 276‑G                                                                                   61

276‑400................. What this Subdivision is about......................................... 61

Ensuring determined trust components are properly taxed                          62

276‑405................. Trustee taxed on shortfall in determined member component (character relating to assessable income)   62

276‑410................. Trustee taxed on excess in determined member component (character relating to tax offset)   63

276‑415................. Trustee taxed on amounts of determined trust component that are not reflected in determined member components....................................................................... 63

Ensuring unders and overs are properly taxed                                                65

276‑420................. Trustee taxed on amounts of under of character relating to assessable income not properly carried forward.......................................................................................... 65

276‑425................. Trustee taxed on amounts of over of character relating to tax offset not properly carried forward           66

Commissioner may remit tax under this Subdivision                                     67

276‑430................. Commissioner may remit tax under this Subdivision........ 67

Subdivision 276‑H—AMMA statements                                                             67

Guide to Subdivision 276‑H                                                                                   67

276‑450................. What this Subdivision is about......................................... 67

Operative provisions                                                                                               68

276‑455................. Obligation to give an AMMA statement........................... 68

276‑460................. AMIT member annual statement (or AMMA statement)... 69

Subdivision 276‑J—Debt‑like trust instruments                                               69

Guide to Subdivision 276‑J                                                                                    69

276‑500................. What this Subdivision is about......................................... 69

Operative provisions                                                                                               70

276‑505................. Meaning of debt‑like trust instrument............................... 70

276‑510................. Debt‑like trust instruments treated as debt interests etc..... 71

276‑515................. Distribution on debt‑like trust instrument could be deductible in working out trust components             71

Subdivision 276‑K—Ceasing to be an AMIT                                                    72

Guide to Subdivision 276‑K                                                                                   72

276‑800................. What this Subdivision is about......................................... 72

Operative provisions                                                                                               72

276‑805................. Application of Subdivision to former AMIT.................... 72

276‑810................. Continue to work out trust components, unders, overs etc. 73

276‑815................. Effect of increase.............................................................. 73

276‑820................. Effect of decrease.............................................................. 74

Part 3‑30Superannuation                                                                                           76

Division 280—Guide to the superannuation provisions                           76

280‑1..................... Effect of this Division....................................................... 76

280‑5..................... Overview.......................................................................... 77

Contributions phase                                                                                                 77

280‑10................... Contributions phase—deductibility................................... 77

280‑15................... Contributions phase—limits on superannuation tax concessions             78

Investment phase                                                                                                      79

280‑20................... Investment phase.............................................................. 79

Benefits phase                                                                                                            79

280‑25................... Benefits phase—different types of superannuation benefit 79

280‑30................... Benefits phase—taxation varies with age of recipient and type of benefit                79

280‑35................... Benefits phase—roll‑overs............................................... 80

The regulatory scheme outside this Act                                                              80

280‑40................... Other relevant legislative schemes.................................... 80

Division 285—General concepts relating to superannuation                82

285‑5..................... Transfers of property........................................................ 82

Division 290Contributions to superannuation funds                             83

Guide to Division 290                                                                                              83

290‑1..................... What this Division is about............................................... 83

Subdivision 290‑AGeneral rules                                                                      83

290‑5..................... Non‑application to roll‑over superannuation benefits etc.. 83

290‑10................... No deductions other than under this Division................... 84

Subdivision 290‑B—Deduction of employer contributions and other employment‑connected contributions        84

Deducting employer contributions                                                                       85

290‑60................... Employer contributions deductible.................................... 85

290‑65................... Application to employees etc............................................ 85

Conditions for deducting an employer contribution                                       86

290‑70................... Employment activity conditions........................................ 86

290‑75................... Complying fund conditions.............................................. 86

290‑80................... Age related conditions...................................................... 87

Other employment‑connected deductions                                                          89

290‑85................... Contributions for former employees etc............................ 89

290‑90................... Controlling interest deductions......................................... 92

290‑95................... Amounts offset against superannuation guarantee charge. 93

Returned contributions                                                                                           93

290‑100................. Returned contributions assessable.................................... 93

Subdivision 290‑CDeducting personal contributions                                  94

290‑150................. Personal contributions deductible..................................... 94

Conditions for deducting a personal contribution                                           95

290‑155................. Complying superannuation fund condition....................... 95

290‑165................. Age‑related conditions...................................................... 96

290‑167................. Contribution must not be a downsizer contribution.......... 96

290‑168................. Contribution must not be a re‑contribution under the first home super saver scheme              96

290‑170................. Notice of intent to deduct conditions................................. 97

290‑175................. Deduction limited by amount specified in notice............... 99

290‑180................. Notice may be varied but not revoked or withdrawn........ 99

Subdivision 290‑DTax offsets for spouse contributions                           101

290‑230................. Offset for spouse contribution........................................ 101

290‑235................. Limit on amount of tax offsets........................................ 103

290‑240................. Tax file number............................................................... 103

Division 291—Excess concessional contributions                                     104

Guide to Division 291                                                                                            104

291‑1..................... What this Division is about............................................. 104

Subdivision 291‑A—Object of this Division                                                    105

291‑5..................... Object of this Division.................................................... 105

Subdivision 291‑B—Excess concessional contributions                               105

Guide to Subdivision 291‑B                                                                                 105

291‑10................... What this Subdivision is about....................................... 105

Operative provisions                                                                                             106

291‑15................... Excess concessional contributions—assessable income, 15% tax offset  106

291‑20................... Your excess concessional contributions for a financial year 106

291‑25................... Your concessional contributions for a financial year...... 107

Subdivision 291‑C—Modifications for defined benefit interests               108

Guide to Subdivision 291‑C                                                                                 108

291‑155................. What this Subdivision is about....................................... 108

Operative provisions                                                                                             109

291‑160................. Application..................................................................... 109

291‑165................. Concessional contributions—special rules for defined benefit interests   109

291‑170................. Notional taxed contributions........................................... 110

291‑175................. Defined benefit interest................................................... 111

Subdivision 291‑CA—Contributions that do not result in excess contributions             112

Guide to Subdivision 291‑CA                                                                              112

291‑365................. What this Subdivision is about....................................... 112

Operative provisions                                                                                             112

291‑370................. Contributions that do not result in excess contributions.. 112

Subdivision 291‑D—Other provisions                                                              113

Guide to Subdivision 291‑D                                                                                 113

291‑460................. What this Subdivision is about....................................... 113

Operative provisions                                                                                             114

291‑465................. Commissioner’s discretion to disregard contributions etc. in relation to a financial year          114

Division 292—Excess non‑concessional contributions                            117

Guide to Division 292                                                                                            117

292‑1..................... What this Division is about............................................. 117

Subdivision 292‑AObject of this Division                                                    118

292‑5..................... Object of this Division.................................................... 118

Subdivision 292‑B—Assessable income and tax offset                                 118

292‑15................... What this Subdivision is about....................................... 118

292‑20................... Amount in assessable income, and tax offset, relating to your non‑concessional contributions               119

292‑25................... Amount included in assessable income........................... 119

292‑30................... Amount of the tax offset................................................. 120

Subdivision 292‑CExcess non‑concessional contributions tax               120

292‑75................... What this Subdivision is about....................................... 120

Operative provisions                                                                                             121

292‑80................... Liability for excess non‑concessional contributions tax.. 121

292‑85................... Your excess non‑concessional contributions for a financial year             121

292‑90................... Your non‑concessional contributions for a financial year 124

292‑95................... Contributions arising from structured settlements or orders for personal injuries    126

292‑100................. Contribution relating to some CGT small business concessions              129

292‑102................. Downsizer contributions................................................. 132

292‑105................. CGT cap amount............................................................. 136

Subdivision 292‑EExcess non‑concessional contributions tax assessments 137

Guide to Subdivision 292‑E                                                                                 137

292‑225................. What this Subdivision is about....................................... 137

Operative provisions                                                                                             137

292‑230................. Commissioner must make an excess non‑concessional contributions tax assessment             137

292‑240................. Validity of assessment.................................................... 138

292‑245................. Objections....................................................................... 138

Subdivision 292‑FAmending excess non‑concessional contributions tax assessments              138

Guide to Subdivision 292‑F                                                                                  138

292‑300................. What this Subdivision is about....................................... 138

Operative provisions                                                                                             139

292‑305................. Amendments within 4 years of the original assessment.. 139

292‑310................. Amended assessments are treated as excess non‑concessional contributions tax assessments 139

292‑315................. Later amendments—on request....................................... 139

292‑320................. Later amendments—fraud or evasion............................. 140

292‑325................. Further amendment of an amended particular................. 140

292‑330................. Amendment on review etc.............................................. 141

Subdivision 292‑G—Collection and recovery                                                141

Guide to Subdivision 292‑G                                                                                 141

292‑380................. What this Subdivision is about....................................... 141

Operative provisions                                                                                             142

292‑385................. Due date for payment of excess non‑concessional contributions tax        142

292‑390................. General interest charge.................................................... 142

292‑395................. Refunds of amounts overpaid......................................... 142

Subdivision 292‑HOther provisions                                                              143

292‑465................. Commissioner’s discretion to disregard contributions etc. in relation to a financial year          143

292‑467................. Direction that the value of superannuation interests is nil 145

Division 293—Sustaining the superannuation contribution concession 147

Guide to Division 293                                                                                            147

293‑1..................... What this Division is about............................................. 147

Subdivision 293‑A—Object of this Division                                                    148

Operative provisions                                                                                             148

293‑5..................... Object of this Division.................................................... 148

Subdivision 293‑B—Sustaining the superannuation contribution concession                148

Guide to Subdivision 293‑B                                                                                 148

293‑10................... What this Subdivision is about....................................... 148

Liability for tax                                                                                                      149

293‑15................... Liability for tax............................................................... 149

293‑20................... Your taxable contributions............................................. 149

Low tax contributions                                                                                           150

293‑25................... Your low tax contributions............................................. 150

293‑30................... Low tax contributed amounts.......................................... 150

Subdivision 293‑C—When tax is payable                                                        151

Guide to Subdivision 293‑C                                                                                 151

293‑60................... What this Subdivision is about....................................... 151

Operative provisions                                                                                             152

293‑65................... When tax is payable—original assessments.................... 152

293‑70................... When tax is payable—amended assessments.................. 152

293‑75................... General interest charge.................................................... 153

Subdivision 293‑D—Modifications for defined benefit interests               153

Guide to Subdivision 293‑D                                                                                 153

293‑100................. What this Subdivision is about....................................... 153

Operative provisions                                                                                             154

293‑105................. Low tax contributions—modification for defined benefit interests           154

293‑115................. Defined benefit contributions.......................................... 154

Subdivision 293‑E—Modifications for constitutionally protected State higher level office holders       156

Guide to Subdivision 293‑E                                                                                 156

293‑140................. What this Subdivision is about....................................... 156

Operative provisions                                                                                             156

293‑145................. Who this Subdivision applies to..................................... 156

293‑150................. Low tax contributionsmodification for CPFs.............. 157

293‑155................. High income threshold—effect of modification.............. 158

293‑160................. Salary packaged contributions........................................ 158

Subdivision 293‑F—Modifications for Commonwealth justices                159

Guide to Subdivision 293‑F                                                                                  159

293‑185................. What this Subdivision is about....................................... 159

Operative provisions                                                                                             159

293‑190................. Who this Subdivision applies to..................................... 159

293‑195................. Defined benefit contributions—modified treatment of contributions under the Judges’ Pensions Act 1968........................................................................................ 160

293‑200................. High income threshold—effect of modification.............. 160

Subdivision 293‑G—Modifications for temporary residents who depart Australia     161

Guide to Subdivision 293‑G                                                                                 161

293‑225................. What this Subdivision is about....................................... 161

Operative provisions                                                                                             161

293‑230................. Who is entitled to a refund.............................................. 161

293‑235................. Amount of the refund..................................................... 162

293‑240................. Entitlement to refund stops all Division 293 tax liabilities 162

Division 294—Transfer balance cap                                                                163

Guide to Division 294                                                                                            163

294‑1..................... What this Division is about............................................. 163

Subdivision 294‑A—Object of this Division                                                    164

Operative provisions                                                                                             164

294‑5..................... Object of this Division.................................................... 164

Subdivision 294‑B—Transfer balance account                                              164

Guide to Subdivision 294‑B                                                                                 164

294‑10................... What this Subdivision is about....................................... 164

Operative provisions                                                                                             165

294‑15................... When you have a transfer balance account...................... 165

294‑20................... Meaning of retirement phase recipient............................ 165

294‑25................... Transfer balance credits.................................................. 166

294‑30................... Excess transfer balance................................................... 168

294‑35................... Your transfer balance cap............................................... 168

294‑40................... Proportionally indexed transfer balance cap.................... 169

294‑45................... Transfer balance account ends........................................ 170

294‑50................... Assumptions about income streams................................ 170

294‑55................... Repayment of limited recourse borrowing arrangement.. 171

Subdivision 294‑C—Transfer balance debits                                                 172

Guide to Subdivision 294‑C                                                                                 172

294‑75................... What this Subdivision is about....................................... 172

Operative provisions                                                                                             172

294‑80................... Transfer balance debits................................................... 172

294‑85................... Certain events that result in reduced superannuation....... 175

294‑90................... Payment splits................................................................. 176

294‑95................... Payment splits—no double debiting............................... 177

Subdivision 294‑D—Modifications for certain defined benefit income streams           177

Guide to Subdivision 294‑D                                                                                 177

294‑120................. What this Subdivision is about....................................... 177

Operative provisions                                                                                             178

294‑125................. When this Subdivision applies........................................ 178

294‑130................. Meaning of capped defined benefit income stream......... 178

294‑135................. Transfer balance credit—special rule for capped defined benefit income streams    179

294‑140................. Excess transfer balance—special rule for capped defined benefit income streams   181

294‑145................. Transfer balance debits—special rules for capped defined benefit income streams  181

Subdivision 294‑E—Modifications for death benefits dependants who are children   184

Guide to Subdivision 294‑E                                                                                 184

294‑170................. What this Subdivision is about....................................... 184

Operative provisions                                                                                             185

294‑175................. When this Subdivision applies........................................ 185

294‑180................. Transfer balance account ends........................................ 185

294‑185................. Transfer balance cap—special rule for child recipient..... 186

294‑190................. Cap increment—child recipient just before 1 July 2017.. 186

294‑195................. Cap increment—child recipient on or after 1 July 2017, deceased had no transfer balance account         187

294‑200................. Cap increment—child recipient on or after 1 July 2017, deceased had transfer balance account              187

Subdivision 294‑F—Excess transfer balance tax                                           190

Guide to Subdivision 294‑F                                                                                  190

294‑225................. What this Subdivision is about....................................... 190

Operative provisions                                                                                             190

294‑230................. Excess transfer balance tax............................................. 190

294‑235................. Your excess transfer balance earnings............................ 191

294‑240................. When tax is payable—original assessments.................... 191

294‑245................. When tax is payable—amended assessments.................. 191

294‑250................. General interest charge.................................................... 192

Division 295Taxation of superannuation entities                                 193

Guide to Division 295                                                                                            193

295‑1..................... What this Division is about............................................. 193

Subdivision 295‑A—Provisions of general operation                                  194

295‑5..................... Entities to which Division applies................................... 194

295‑10................... How to work out the tax payable by superannuation entities 195

295‑15................... Division does not impose a tax on property of a State.... 196

295‑20................... Exempting laws ineffective............................................. 197

295‑25................... Assessments on basis of anticipated SIS Act notice....... 197

295‑30................... Effect of revocation etc. of SIS Act notices.................... 197

295‑35................... Acronyms used in tables................................................. 197

Subdivision 295‑BModifications of provisions of this Act                      198

295‑85................... CGT to be primary code for calculating gains or losses.. 198

295‑90................... CGT rules for pre‑30 June 1988 assets.......................... 200

295‑95................... Deductions related to contributions................................. 201

295‑100................. Deductions for investing in PSTs and life policies......... 202

295‑105................. Distributions to PST unitholders.................................... 203

Subdivision 295‑CContributions included                                                   203

Guide to Subdivision 295‑C                                                                                 203

295‑155................. What this Subdivision is about....................................... 203

Contributions and payments                                                                                204

295‑160................. Contributions and payments........................................... 204

295‑165................. Exception—spouse contributions................................... 205

295‑170................. Exception—Government co‑contributions and contributions for a child  206

295‑173................. Exception—trustee contributions.................................... 206

295‑175................. Exception—payments by a member spouse.................... 206

295‑180................. Exception—choice to exclude certain contributions........ 207

295‑185................. Exception—temporary residents..................................... 207

Personal contributions and roll‑over amounts                                               207

295‑190................. Personal contributions and roll‑over amounts................. 207

295‑195................. Exclusion of personal contributions—contributions....... 210

295‑197................. Exclusion of personal contributions—successor funds.. 211

Transfers from foreign funds                                                                             212

295‑200................. Transfers from foreign superannuation funds................. 212

Application of tables to RSA providers                                                            213

295‑205................. Application of tables to RSA providers.......................... 213

Former constitutionally protected funds                                                          213

295‑210................. Former constitutionally protected funds.......................... 213

Subdivision 295‑DContributions excluded                                                  214

295‑260................. Transfer of liability to investment vehicle....................... 214

295‑265................. Application of pre‑1 July 88 funding credits.................. 215

295‑270................. Anticipated funding credits............................................. 218

Subdivision 295‑EOther income amounts                                                   219

Amounts included                                                                                                   219

295‑320................. Other amounts included in assessable income................ 219

295‑325................. Previously complying funds........................................... 220

295‑330................. Previously foreign funds................................................ 221

Amounts excluded                                                                                                  221

295‑335................. Amounts excluded from assessable income.................... 221

Subdivision 295‑FExempt income                                                                 222

295‑385................. Income from assets set aside to meet current pension liabilities               222

295‑387................. Disregarded small fund assets........................................ 223

295‑390................. Income from other assets used to meet current pension liabilities            224

295‑395................. Meaning of segregated non‑current assets.................... 227

295‑400................. Income of a PST attributable to current pension liabilities 227

295‑405................. Other exempt income...................................................... 228

295‑407................. Covered superannuation income streams—RSAs.......... 229

295‑410................. Amount credited to RSA................................................ 229

Subdivision 295‑GDeductions                                                                         229

Death or disability benefits                                                                                  230

295‑460................. Benefits for which deductions are available.................... 230

295‑465................. Complying funds—deductions for insurance premiums. 230

295‑470................. Complying funds—deductions for future liability to pay benefits            233

295‑475................. RSA providers—deductions for insurance premiums.... 235

295‑480................. Meaning of whole of life policy and endowment policy... 235

Other deductions                                                                                                     236

295‑490................. Other deductions............................................................. 236

Certain amounts cannot be deducted                                                                 239

295‑495................. Amounts that cannot be deducted................................... 239

Subdivision 295‑HComponents of taxable income                                    239

295‑545................. Components of taxable income—complying superannuation funds, complying ADFs and PSTs           240

295‑550................. Meaning of non‑arm’s length income............................ 240

295‑555................. Components of taxable income—RSA providers........... 242

Subdivision 295‑INo‑TFN contributions                                                      243

295‑605................. Liability for tax on no‑TFN contributions income.......... 243

295‑610................. No‑TFN contributions income........................................ 244

295‑615................. Meaning of quoted (for superannuation purposes)........ 244

295‑620................. No reduction under Subdivision 295‑D.......................... 245

295‑625................. Assessments................................................................... 245

Subdivision 295‑JTax offset for no‑TFN contributions income (TFN quoted within 4 years)               246

295‑675................. Entitlement to a tax offset................................................ 246

295‑680................. Amount of the tax offset................................................. 247

Division 301Superannuation member benefits paid from complying plans etc.           248

Guide to Division 301                                                                                            248

301‑1..................... What this Division is about............................................. 248

Subdivision 301‑A—Application                                                                        248

301‑5..................... Division applies to superannuation member benefits paid from complying plans etc.              248

Subdivision 301‑B—Member benefits: general rules                                   249

Member benefits—recipient aged 60 or above                                               249

301‑10................... All superannuation benefits are tax free.......................... 249

Member benefits—recipient aged over preservation age and under 60  250

301‑15................... Tax free status of tax free component............................. 250

301‑20................... Superannuation lump sum—taxable component taxed at 0% up to low rate cap amount, 15% on remainder........................................................................................ 250

301‑25................... Superannuation income stream—taxable component attracts 15% offset 251

Member benefits—recipient aged under preservation age                         251

301‑30................... Tax free status of tax free component............................. 251

301‑35................... Superannuation lump sum—taxable component taxed at 20% 252

301‑40................... Superannuation income stream—taxable component is assessable income, 15% offset for disability benefit........................................................................................ 252

Subdivision 301‑C—Member benefits: elements untaxed in fund             252

301‑90................... Tax free component and element taxed in fund dealt with under Subdivision 301‑B, but element untaxed in the fund dealt with under this Subdivision........................... 253

Member benefits (element untaxed in fund)—recipient aged 60 or above 254

301‑95................... Superannuation lump sum—element untaxed in fund taxed at 15% up to untaxed plan cap amount, top rate on remainder........................................................................ 254

301‑100................. Superannuation income stream—element untaxed in fund attracts 10% offset         254

Member benefits (element untaxed in fund)—recipient aged over preservation age and under 60          255

301‑105................. Superannuation lump sum—element untaxed in fund taxed at 15% up to low rate cap amount, 30% up to untaxed plan cap amount, top rate on remainder............. 255

301‑110................. Superannuation income stream—element untaxed in fund is assessable income      256

Member benefits (element untaxed in fund)—recipient aged under preservation age 256

301‑115................. Superannuation lump sum—element untaxed in fund taxed at 30% up to untaxed plan cap amount, top rate on remainder........................................................................ 256

301‑120................. Superannuation income stream—element untaxed in fund is assessable income      256

Miscellaneous                                                                                                          257

301‑125................. Unclaimed money payments by the Commissioner........ 257

Subdivision 301‑D—Departing Australia superannuation payments       257

301‑170................. Departing Australia superannuation payments.............. 257

301‑175................. Treatment of departing Australia superannuation benefits 258

Subdivision 301‑E—Superannuation lump sum member benefits less than $200         259

301‑225................. Superannuation lump sum member benefits less than $200 are tax free   259

Division 302Superannuation death benefits paid from complying plans etc. 260

Guide to Division 302                                                                                            260

302‑1..................... What this Division is about............................................. 260

Subdivision 302‑A—Application                                                                        260

302‑5..................... Division applies to superannuation death benefits paid from complying plans etc.  260

302‑10................... Superannuation death benefits paid to trustee of deceased estate              261

Subdivision 302‑B—Death benefits to dependant                                          262

Lump sum death benefits to dependants are tax free                                    262

302‑60................... All of superannuation lump sum is tax free.................... 262

Superannuation income stream—either deceased died aged 60 or above or dependant aged 60 or above            263

302‑65................... Superannuation income stream benefits are tax free........ 263

Superannuation income stream—deceased died aged under 60 and dependant aged under 60 263

302‑70................... Superannuation income stream—tax free status of tax free component    263

302‑75................... Superannuation income stream—taxable component attracts 15% offset 263

Death benefits to dependant—elements untaxed in fund                              264

302‑80................... Treatment of element untaxed in the fund of superannuation income stream death benefit to dependant  264

302‑85................... Deceased died aged 60 or above or dependant aged 60 years or above—superannuation income stream: element untaxed in fund attracts 10% offset.................... 264

302‑90................... Deceased died aged under 60 and dependant aged under 60—superannuation income stream: element untaxed in fund is assessable income........................................... 265

Subdivision 302‑C—Death benefits to non‑dependant                                  265

Superannuation lump sum                                                                                   265

302‑140................. Superannuation lump sum—tax free status of tax free component           265

302‑145................. Superannuation lump sum—element taxed in the fund taxed at 15%, element untaxed in the fund taxed at 30%........................................................................................ 266

Subdivision 302‑D—Definitions relating to dependants                               266

302‑195................. Meaning of death benefits dependant............................. 266

302‑200................. What is an interdependency relationship?....................... 267

Division 303—Superannuation benefits paid in special circumstances  269

Guide to Division 303                                                                                            269

303‑1..................... What this Division is about............................................. 269

Subdivision 303‑A—Modifications for defined benefit income                 269

Operative provisions                                                                                             270

303‑2..................... Effect of exceeding defined benefit income cap on assessable income     270

303‑3..................... Effect of exceeding defined benefit income cap on tax offsets 270

303‑4..................... Meaning of defined benefit income cap........................... 271

Subdivision 303‑B—Other special circumstances                                         272

303‑5..................... Commutation of income stream if you are under 25 etc.. 272

303‑10................... Superannuation lump sum member benefit paid to member having a terminal medical condition            272

303‑15................... Payments from release authorities—general................... 273

303‑20................... Payments from release authorities—paying debt account discharge liability for a superannuation interest........................................................................................ 273

Division 304Superannuation benefits in breach of legislative requirements etc.         274

Guide to Division 304                                                                                            274

304‑1..................... What this Division is about............................................. 274

Operative provisions                                                                                             274

304‑5..................... Application..................................................................... 274

304‑10................... Superannuation benefits in breach of legislative requirements etc.           274

304‑20................... Excess payments from release authorities—paying debt account discharge liability for a superannuation interest............................................................................ 276

Division 305—Superannuation benefits paid from non‑complying superannuation plans           277

Guide to Division 305                                                                                            277

305‑1..................... What this Division is about............................................. 277

Subdivision 305‑A—Superannuation benefits from Australian non‑complying superannuation funds  277

305‑5..................... Tax treatment of superannuation benefits from certain Australian non‑complying superannuation funds........................................................................................ 277

Subdivision 305‑B—Superannuation benefits from foreign superannuation funds     278

Application of Subdivision                                                                                   278

305‑55................... Restriction to lump sums received from certain foreign superannuation funds        278

Lump sums received within 6 months after Australian residency or termination of foreign employment etc.     279

305‑60................... Lump sums tax free—foreign resident period................. 279

305‑65................... Lump sums tax free—Australian resident period............ 280

Lump sums to which sections 305‑60 and 305‑65 do not apply                  281

305‑70................... Lump sums received more than 6 months after Australian residency or termination of foreign employment etc......................................................................................... 281

305‑75................... Lump sums—applicable fund earnings.......................... 282

305‑80................... Lump sums paid into complying superannuation plans—choice              284

Division 306Roll‑overs etc.                                                                               285

Guide to Division 306                                                                                            285

306‑1..................... What this Division is about............................................. 285

Operative provisions                                                                                             285

306‑5..................... Effect of a roll‑over superannuation benefit.................... 285

306‑10................... Roll‑over superannuation benefit.................................... 285

306‑12................... Involuntary roll‑over superannuation benefit................. 286

306‑15................... Tax on excess untaxed roll‑over amounts....................... 287

306‑20................... Effect of payment to government of unclaimed superannuation money   288

306‑25................... Payments connected with financial claims scheme to RSAs 288

Division 307Key concepts relating to superannuation benefits    291

Guide to Division 307                                                                                            291

307‑1..................... What this Division is about............................................. 291

Subdivision 307‑A—Superannuation benefits generally                             292

307‑5..................... What is a superannuation benefit?.................................. 292

307‑10................... Payments that are not superannuation benefits............... 296

307‑15................... Payments for your benefit or at your direction or request 297

Subdivision 307‑B—Superannuation lump sums and superannuation income stream benefits 298

307‑65................... Meaning of superannuation lump sum........................... 298

307‑70................... Meaning of superannuation income stream and superannuation income stream benefit        298

307‑75................... Meaning of retirement phase superannuation income stream benefit     298

307‑80................... When a superannuation income stream is in the retirement phase           299

Subdivision 307‑C—Components of a superannuation benefit                  301

307‑120................. Components of superannuation benefit........................... 301

307‑125................. Proportioning rule........................................................... 302

307‑130................. Superannuation guarantee payment consists entirely of taxable component             304

307‑135................. Superannuation co‑contribution benefit payment consists entirely of tax free component        304

307‑140................. Contributions‑splitting superannuation benefit consists entirely of taxable component            304

307‑142................. Components of certain unclaimed money payments....... 304

307‑145................. Modification for disability benefits................................. 309

307‑150................. Modification in respect of superannuation lump sum with element untaxed in fund                310

Subdivision 307‑D—Superannuation interests                                               311

307‑200................. Regulations relating to meaning of superannuation interests 311

307‑205................. Value of superannuation interest..................................... 312

307‑210................. Tax free component of superannuation interest............... 313

307‑215................. Taxable component of superannuation interest............... 313

307‑220................. What is the contributions segment?................................ 313

307‑225................. What is the crystallised segment?................................... 315

307‑230................. Total superannuation balance.......................................... 316

Subdivision 307‑E—Elements taxed and untaxed in the fund of the taxable component of superannuation benefit                                                                                                       318

307‑275................. Element taxed in the fund and element untaxed in the fund of superannuation benefits            318

307‑280................. Superannuation benefits from constitutionally protected funds etc.          319

307‑285................. Trustee can choose to convert element taxed in the fund to element untaxed in the fund          319

307‑290................. Taxed and untaxed elements of death benefit superannuation lump sums                320

307‑295................. Superannuation benefits from public sector superannuation schemes may include untaxed element        321

307‑297................. Public sector superannuation schemes—elements set by regulations       322

307‑300................. Certain unclaimed money payments................................ 323

Subdivision 307‑F—Low rate cap and untaxed plan cap amounts            326

307‑345................. Low rate cap amount...................................................... 326

307‑350................. Untaxed plan cap amount............................................... 327

Subdivision 307‑G—Other concepts                                                                  329

307‑400................. Meaning of service period for a superannuation lump sum 329

Division 310—Loss relief for merging superannuation funds            331

Guide to Division 310                                                                                            330

310‑1..................... What this Division is about............................................. 331

Operative provisions                                                                                             332

Subdivision 310‑A—Object of this Division                                                    332

310‑5..................... Object............................................................................. 332

Subdivision 310‑B—Choice to transfer losses                                                332

310‑10................... Original fund’s assets extend beyond life insurance policies and units in pooled superannuation trusts  332

310‑15................... Original fund’s assets include a complying superannuation life insurance policy    334

310‑20................... Original fund’s assets include units in a pooled superannuation trust      336

Subdivision 310‑C—Consequences of choosing to transfer losses             337

310‑25................... Who losses can be transferred to.................................... 338

310‑30................... Losses that can be transferred......................................... 338

310‑35................... Effect of transferring a net capital loss............................ 339

310‑40................... Effect of transferring a tax loss....................................... 340

Subdivision 310‑D—Choice for assets roll‑over                                            341

310‑45................... Choosing the assets roll‑over.......................................... 341

310‑50................... Choosing the form of the assets roll‑over....................... 343

Subdivision 310‑E—Consequences of choosing assets roll‑over                343

310‑55................... CGT assets—if global asset approach chosen................ 344

310‑60................... CGT assets—individual asset approach.......................... 344

310‑65................... Revenue assets—if global asset approach chosen........... 345

310‑70................... Revenue assets—individual asset approach.................... 346

310‑75................... Further consequences for roll‑overs involving life insurance companies 346

Subdivision 310‑F—Choices                                                                                347

310‑85................... Choices........................................................................... 347

Division 311—Loss relief and asset roll‑over for transfer of amounts to a MySuper product                348

Guide to Division 311                                                                                            347

311‑1..................... What this Division is about............................................. 348

Operative provisions                                                                                             349

Subdivision 311‑A—Object of this Division                                                    349

311‑5..................... Object............................................................................. 349

Subdivision 311‑B—Choosing loss transfers and asset roll‑overs             349

311‑10................... Certain entities can choose transfer of losses, asset roll‑overs, or both for transfers between funds        349

311‑12................... Certain entities can choose asset roll‑overs for transfers within a fund    351

Subdivision 311‑C—Consequences of choosing to transfer losses             352

311‑15................... Who losses can be transferred to.................................... 353

311‑20................... Losses that can be transferred......................................... 353

311‑25................... Effect of transferring a net capital loss............................ 355

311‑30................... Effect of transferring a tax loss....................................... 355

311‑35................... Realisation of certain assets after completion time.......... 356

Subdivision 311‑D—Consequences of choosing asset roll‑over                 357

311‑40................... Assets roll‑over—transfers between funds..................... 357

311‑42................... Assets roll‑over—transfers within a fund....................... 358

311‑45................... CGT assets..................................................................... 360

311‑50................... Revenue assets................................................................ 360

311‑55................... Further consequences for roll‑overs involving life insurance companies 361

Subdivision 311‑E—Choices                                                                               361

311‑60................... Choices........................................................................... 361

Division 312—Trans‑Tasman portability of retirement savings       362

Guide to Division 312                                                                                            361

312‑1..................... What this Division is about............................................. 362

Subdivision 312‑A—Preliminary                                                                       362

312‑5..................... Division implements Arrangement with New Zealand... 362

Subdivision 312‑B—Amounts contributed to complying superannuation funds from KiwiSaver schemes            363

312‑10................... Amounts contributed to complying superannuation funds from KiwiSaver schemes              363

Subdivision 312‑C—Superannuation benefits paid to KiwiSaver scheme providers    365

312‑15................... Superannuation benefits paid to KiwiSaver schemes...... 365

Division 313—First home super saver scheme                                           366

Guide to Division 313                                                                                            365

313‑1..................... What this Division is about............................................. 366

Subdivision 313‑A—Preliminary                                                                       366

Operative provisions                                                                                             367

313‑5..................... Object of this Division.................................................... 367

313‑10................... Application of this Division............................................ 367

Subdivision 313‑B—Assessable income and tax offset                                 367

Guide to Subdivision 313‑B                                                                                 367

313‑15................... What this Subdivision is about....................................... 367

Operative provisions                                                                                             368

313‑20................... Amount included in assessable income........................... 368

313‑25................... Amount of the tax offset................................................. 368

Subdivision 313‑C—Purchasing or constructing a residential premises 369

Guide to Subdivision 313‑C                                                                                 369

313‑30................... What this Subdivision is about....................................... 369

Operative provisions                                                                                             369

313‑35................... Purchasing or constructing a residential premises........... 369

313‑40................... Notifying Commissioner................................................ 370

Subdivision 313‑D—Contributing amounts to superannuation                  370

Guide to Subdivision 313‑D                                                                                 370

313‑45................... What this Subdivision is about....................................... 370

Operative provisions                                                                                             371

313‑50................... Contributing amounts to superannuation........................ 371

Subdivision 313‑E—First home super saver tax                                            372

Guide to Subdivision 313‑E                                                                                 372

313‑55................... What this Subdivision is about....................................... 372

Operative provisions                                                                                             372

313‑60................... First home super saver tax.............................................. 372

313‑65................... When tax is payable—original assessments.................... 373

313‑70................... When tax is payable—amended assessments.................. 373

313‑75................... General interest charge.................................................... 373

Subdivision 313‑F—Review of decisions                                                          374

Guide to Subdivision 313‑F                                                                                  374

313‑80................... What this Subdivision is about....................................... 374

Operative provisions                                                                                             374

313‑85................... Review rights for decisions made under this Division.... 374


Chapter 3Specialist liability rules

Part 3‑25Particular kinds of trusts

Division 275Australian managed investment trusts: general

Table of Subdivisions

             Guide to Division 275

275‑A   Meaning of managed investment trust

275‑B    Choice for capital treatment of managed investment trust gains and losses

275‑C    Carried interests in managed investment trusts

275‑L    Modification for non‑arm’s length income

Guide to Division 275

275‑1  What this Division is about

The trustee of certain Australian managed investment trusts may make a choice that certain assets of the trust be dealt with under CGT rules. If the trustee does not make such a choice, those assets will be treated as revenue assets (see Subdivision 275‑B).

Gains and profits from carried interests held in entities that are or were Australian managed investment trusts (or certain other trusts) are included in the assessable income of the holder of the interests. The holder is entitled to a deduction from losses from such interests (see Subdivision 275‑C).

Subdivision 275‑AMeaning of managed investment trust

Guide to Subdivision 275‑A

275‑5  What this Subdivision is about

This Subdivision sets out the requirements for a trust to be a managed investment trust in relation to an income year.

Table of sections

Operative provisions

275‑10      Meaning of managed investment trust

275‑15      Trusts with wholesale membership

275‑20      Widely‑held requirements—ordinary case

275‑25      Widely‑held requirements for registered MIT—special case for entities covered by subsection 275‑20(4)

275‑30      Closely‑held restrictions

275‑35      Licensing requirements for unregistered MIS

275‑40      MIT participation interest

275‑45      Meaning of managed investment trust—every member of trust is a managed investment trust etc.

275‑50      Extended definition of managed investment trust—no fund payment made in relation to the income year

275‑55      Extended definition of managed investment trust—temporary circumstances outside the control of the trustee

Operative provisions

275‑10  Meaning of managed investment trust

             (1)  A trust is a managed investment trust in relation to an income year if any of the following requirements are met:

                     (a)  the trust is covered under subsection (3) of this section in relation to the income year (ordinary case);

                     (b)  the trust is covered under section 275‑45 in relation to the income year (only members of trust are managed investment trusts etc.).

             (2)  A trust is also a managed investment trust in relation to an income year if any of the following requirements are met:

                     (a)  the trust is covered under section 275‑50 in relation to the income year (no fund payment made in relation to the income year);

                     (b)  the trust is covered under section 275‑55 in relation to the income year (temporary circumstances outside the control of the trustee).

             (3)  A trust is covered under this subsection in relation to an income year if:

                     (a)  at the time the trustee of the trust makes the first *fund payment in relation to the income year, or at an earlier time in the income year:

                              (i)  the trustee of the trust was an Australian resident; or

                             (ii)  the central management and control of the trust was in Australia; and

                     (b)  the trust is not a trust covered by subsection (4) (trading trust etc.) in relation to the income year; and

                     (c)  at the time the payment is made, the trust is a managed investment scheme (within the meaning of section 9 of the Corporations Act 2001); and

                     (d)  at the time the payment is made:

                              (i)  the trust is covered by section 275‑15 (trusts with wholesale membership); or

                             (ii)  if the trust is not covered by section 275‑15—the trust is registered under section 601EB of the Corporations Act 2001; and

                     (e)  the trust satisfies, in relation to the income year:

                              (i)  if, at the time the payment is made, the trust is registered under section 601EB of the Corporations Act 2001 and is covered by section 275‑15—either or both of the widely‑held requirements in subsections 275‑20(1) and 275‑25(1); or

                             (ii)  if, at the time the payment is made, the trust is so registered and is not covered by section 275‑15—either or both of the widely‑held requirements in subsections 275‑20(2) and 275‑25(1); or

                            (iii)  if, at the time the payment is made, the trust is not so registered and is covered by section 275‑15—the widely‑held requirements in subsection 275‑20(1); and

                      (f)  the trust satisfies the closely‑held restrictions in subsection 275‑30(1) in relation to the income year; and

                     (g)  if the trust is covered by section 275‑15 at the time the payment is made—it satisfies the licensing requirements in section 275‑35 in relation to the income year.

Trading unit trust or other trust carrying on trading business etc. cannot be managed investment trust

             (4)  A trust is covered by this subsection in relation to an income year if:

                     (a)  in the case of a unit trust—the trust is a trading trust for the purposes of Division 6C of Part III of the Income Tax Assessment Act 1936 in relation to the income year; or

                     (b)  in any other case—the trust at any time in the income year:

                              (i)  carried on a trading business (within the meaning of that Division); or

                             (ii)  controlled, or was able to control, directly or indirectly, the affairs or operations of another person in respect of the carrying on by that other person of a trading business (within the meaning of that Division).

          (4A)  In determining whether a trust is covered by subsection (4), disregard any interest that the trust has in a *VCLP or an *ESVCLP unless:

                     (a)  the trust is a *general partner of the VCLP or ESVCLP; or

                     (b)  the trust has *committed capital in the partnership that, taken together with the sum of the amounts of committed capital in the partnership of any of that partner’s *associates (other than associates to whom subsection (4B) applies), exceeds 30% of the partnership’s committed capital.

          (4B)  This subsection applies to:

                     (a)  an *ADI; or

                     (b)  a *life insurance company; or

                     (c)  a public authority:

                              (i)  that is constituted by a law of a State or internal Territory; and

                             (ii)  that carries on life insurance business within the meaning of section 11 of the Life Insurance Act 1995; or

                     (d)  a widely‑held complying superannuation fund within the meaning of section 4A of the Pooled Development Funds Act 1992; or

                     (e)  a *widely held foreign venture capital fund of funds.

Crown entities etc.

             (5)  For the purposes of paragraphs (3)(d) and (e), treat an entity as registered under section 601EB of the Corporations Act 2001 at the time the payment is made if at that time the trust is operated by:

                     (a)  an entity that would, but for subsection 5A(4) of that Act (about the Crown not being bound by Chapter 6CA or 7 of that Act), be required under that Act to be a financial services licensee (within the meaning of section 761A of that Act) whose licence would cover operating such a managed investment scheme; or

                     (b)  an entity that:

                              (i)  is a *wholly‑owned subsidiary of an entity of a kind mentioned in paragraph (a); and

                             (ii)  would, but for any instrument issued by ASIC under that Act that has effect in relation to the entity and operation of the scheme mentioned in paragraph (3)(c), be required under that Act to be a financial services licensee (within the meaning of section 761A of that Act) whose licence would cover operating such a managed investment scheme.

Start‑up and wind‑down phases

             (6)  Treat the requirements in paragraphs (3)(e) and (f) as being satisfied if:

                     (a)  the trust is created during the period:

                              (i)  starting 12 months before the start of the income year; and

                             (ii)  ending at the end of the income year; or

                     (b)  the trust ceases to exist during the income year, and was a *managed investment trust (disregarding paragraph (a) of this section) in relation to the previous income year.

275‑15  Trusts with wholesale membership

                   A trust is covered by this section at a time if, at that time:

                     (a)  the trust is not required to be registered in accordance with section 601ED of the Corporations Act 2001 (whether or not it is actually so registered) because of subsection 601ED(2) of that Act (no product disclosure statement required) or because it is operated or managed by an entity covered by subsection 275‑35(2) (Crown entities); and

                     (b)  the total number of entities that had become a *member of the trust because a financial product or a financial service was provided to, or acquired by, the entity as a retail client (within the meaning of sections 761G and 761GA of the Corporations Act 2001) is no more than 20; and

                     (c)  the entities mentioned in paragraph (b) have a total *MIT participation interest in the trust of no more than 10%.

275‑20  Widely‑held requirements—ordinary case

             (1)  The trust satisfies the requirements in this subsection in relation to the income year if, at the time the payment mentioned in paragraph 275‑10(3)(a) is made, the trust has at least 25 *members.

             (2)  The trust satisfies the requirements in this subsection in relation to the income year if, at the time the payment mentioned in paragraph 275‑10(3)(a) is made:

                     (a)  units in the trust are listed for quotation in the official list of an *approved stock exchange in Australia; or

                     (b)  the trust has at least 50 *members (ignoring objects of a trust).

             (3)  For the purposes of subsection (1) and paragraph (2)(b), determine the number of *members of the trust as follows:

                     (a)  first, by applying the rules in subsection (5), identify:

                              (i)  the members of the trust that are not entities covered by subsection (4); and

                             (ii)  the members of the trust that are entities covered by subsection (4);

                     (b)  next, work out the number of members mentioned in subparagraph (a)(i);

                     (c)  next:

                              (i)  work out the *MIT participation interest in the trust of each entity mentioned in subparagraph (a)(ii); and

                             (ii)  for each of those entities, multiply the total of its MIT participation interest in the trust by 50 and round the result upwards to the nearest whole number; and

                            (iii)  work out the total of the results of subparagraph (ii) for all of those entities;

                     (d)  next, work out the total of the results of paragraphs (b) and (c).

             (4)  This subsection covers the following kinds of entity:

                     (a)  a *life insurance company;

                     (b)  a *foreign life insurance company that is regulated under a *foreign law;

                     (c)  a *complying superannuation fund, a *complying approved deposit fund or a *foreign superannuation fund, being a fund that has at least 50 *members;

                     (d)  a *pooled superannuation trust that has at least one member that is a complying superannuation fund that has at least 50 members;

                     (e)  a *managed investment trust in relation to the income year;

                      (f)  an entity:

                              (i)  that is recognised under a foreign law as being used for collective investment by pooling the contributions of its members as consideration to acquire rights to benefits produced by the entity; and

                             (ii)  that has at least 50 members; and

                            (iii)  the contributing members of which do not have day‑to‑day control over the entity’s operation;

                     (g)  an entity, the principal purpose of which is to fund pensions (including disability and similar benefits) for the citizens or other contributors of a foreign country, if:

                              (i)  the entity is a fund established by an *exempt foreign government agency; or

                             (ii)  the entity is established under a foreign law for an exempt foreign government agency; or

                            (iii)  the entity is a *wholly‑owned subsidiary of an entity mentioned in subparagraph (i) or (ii);

                     (h)  an investment entity that satisfies all of these requirements:

                              (i)  the entity is wholly‑owned by one or more *foreign government agencies, or is a wholly‑owned subsidiary of one or more foreign government agencies;

                             (ii)  the entity is established using only the public money or public property of the foreign government concerned;

                            (iii)  all economic benefits obtained by the entity have passed, or are expected to pass, to the foreign government concerned;

                      (i)  an entity established and wholly‑owned by an *Australian government agency, if the capital of the entity, and returns from the investment of that capital, are used for the primary purpose of meeting statutory government liabilities or obligations (such as superannuation liabilities and liabilities arising from compensation or workcover claims);

                      (j)  a *limited partnership, if, throughout the income year:

                              (i)  at least 95% of the *membership interests in the limited partnership are owned by entities mentioned in the preceding paragraphs of this subsection, or by entities that are wholly‑owned by entities so mentioned; and

                             (ii)  the remaining membership interests (if any) in the limited partnership are owned by a *general partner of the limited partnership that habitually exercises the management power of the limited partnership;

                     (k)  an entity, all the membership interests in which are owned by any of the following:

                              (i)  entities mentioned in the preceding paragraphs of this subsection;

                             (ii)  entities that are wholly‑owned by entities mentioned in the preceding paragraphs of this subsection;

                            (iii)  entities that are covered under this subsection because of a previous operation of this paragraph;

                      (l)  an entity of a kind similar to an entity mentioned in the preceding paragraphs of this subsection as specified in the regulations.

             (5)  The rules are as follows:

                     (a)  if an entity that is not a trust holds interests in the trust indirectly, through a *chain of trusts:

                              (i)  treat the entity as a member of the trust; and

                             (ii)  do not treat a trust in the chain of trusts as a member of the trust;

                     (b)  do not treat an object of the trust as a member of the trust;

                     (c)  if the trust is mentioned in subparagraph 275‑10(3)(d)(i) (trusts with wholesale membership)—do not treat an individual as a member of the trust (other than an individual who became a member of the trust because a financial product or a financial service was provided to, or acquired by, the individual as a wholesale client (within the meaning of section 761G of the Corporations Act 2001));

                     (d)  the rules in subsection (7).

             (6)  For the purposes of paragraph (5)(a), treat an entity covered by subsection (4) as an entity that is not a trust.

             (7)  The rules are as follows:

                     (a)  treat the following entities as together being one entity:

                              (i)  an individual;

                             (ii)  each of his or her *relatives;

                            (iii)  each entity acting in the capacity of nominee of an individual mentioned in subparagraph (i) or (ii);

                     (b)  treat the following entities as together being one entity (the notional entity):

                              (i)  an entity that is not an individual;

                             (ii)  each entity acting in the capacity of nominee of the entity mentioned in subparagraph (i).

             (8)  For the purposes of subsection (5), if the entity mentioned in subparagraph (7)(b)(i) is an entity covered by subsection (4), treat the notional entity as an entity covered by subsection (4).

275‑25  Widely‑held requirements for registered MIT—special case for entities covered by subsection 275‑20(4)

             (1)  The trust satisfies the requirements in this subsection in relation to the income year if:

                     (a)  one or more entities covered by subsection 275‑20(4) have a total *MIT participation interest in the trust of more than 25% at the time the payment mentioned in paragraph 275‑10(3)(a) is made; and

                     (b)  at no time in the income year does an entity (other than an entity covered by subsection 275‑20(4)) have a MIT participation interest in the trust of more than 60%.

             (2)  For the purposes of paragraphs (1)(a) and (b):

                     (a)  if:

                              (i)  an entity covered by subsection 275‑20(4) has a *MIT participation interest (the first interest) in the trust; and

                             (ii)  another entity covered by subsection 275‑20(4) also has a MIT participation interest (the second interest) in the trust;

                            disregard the second interest to the extent that it arises through the existence of the first interest; and

                     (b)  if an entity that is not a trust has a MIT participation interest in the trust because it holds interests in the trust indirectly, through a *chain of trusts—do not treat a trust in the chain of trusts as having a MIT participation interest in the trust.

             (3)  For the purposes of paragraph (2)(b), treat an entity covered by subsection 275‑20(4) as an entity that is not a trust.

             (4)  For the purposes of paragraphs (1)(a) and (b), apply the rules in subsection 275‑20(7).

275‑30  Closely‑held restrictions

             (1)  The trust satisfies the requirements in this subsection in relation to the income year unless, at any time in the income year, any of the following situations exist:

                     (a)  for a trust mentioned in subparagraph 275‑10(3)(d)(i) (trusts with wholesale membership)—10 or fewer persons have a total *MIT participation interest in the trust of 75% or more;

                     (b)  if paragraph (a) does not apply—20 or fewer persons have a total MIT participation interest in the trust of 75% or more;

                     (c)  a foreign resident individual has a MIT participation interest in the trust of 10% or more.

             (2)  For the purposes of paragraphs (1)(a) and (b):

                     (a)  if an entity covered by subsection 275‑20(4) has a *MIT participation interest in the trust—treat that entity as not having a MIT participation interest in the trust; and

                     (b)  if an entity that is not a trust has a MIT participation interest in the trust because it holds interests in the trust indirectly, through a *chain of trusts:

                              (i)  if the entity is covered by subsection 275‑20(4)—do not treat it as having a MIT participation interest in the trust; and

                             (ii)  do not treat a trust in the chain of trusts as having a MIT participation interest in the trust.

             (3)  For the purposes of paragraph (2)(b), treat an entity covered by subsection 275‑20(4) as an entity that is not a trust.

             (4)  For the purposes of paragraphs (1)(a) and (b), apply the rules in subsection 275‑20(7).

275‑35  Licensing requirements for unregistered MIS

             (1)  The trust satisfies the requirements in this section in relation to the income year if, at the time the payment mentioned in paragraph 275‑10(3)(a) is made (the time of the first fund payment for the income year):

                     (a)  the trust is operated or managed by:

                              (i)  a financial services licensee (within the meaning of section 761A of the Corporations Act 2001) holding an Australian financial services licence whose licence covers it providing financial services (within the meaning of section 766A of that Act) to wholesale clients (within the meaning of section 761G of that Act); or

                             (ii)  an authorised representative (within the meaning of section 761A of that Act) of such a financial services licensee; or

                     (b)  the trust is operated or managed by an entity covered by subsection (2); or

                     (c)  the trust is operated or managed by an entity that:

                              (i)  is a *wholly‑owned subsidiary of an entity covered by subsection (2); and

                             (ii)  is an entity covered by subsection (3).

             (2)  An entity is covered by this subsection if it would, but for subsection 5A(4) of the Corporations Act 2001 (about the Crown not being bound by Chapter 6CA or 7 of that Act), be required under that Act to be a financial services licensee (within the meaning of section 761A of that Act).

             (3)  An entity is covered by this subsection if it would, but for any instrument issued by ASIC under the Corporations Act 2001 that has effect in relation to the entity and the operation of the scheme mentioned in paragraph 275‑10(3)(c), be required under that Act to be a financial services licensee (within the meaning of section 761A of that Act).

275‑40  MIT participation interest

             (1)  An entity has a MIT participation interest in a trust if the entity, directly or indirectly:

                     (a)  holds, or has the right to *acquire, interests representing a percentage of the value of the interests in the trust; or

                     (b)  has the control of, or the ability to control, a percentage of the rights attaching to *membership interests in the trust; or

                     (c)  has the right to receive a percentage of any distribution of income that the trust may make.

             (2)  The MIT participation interest of the entity in the trust is the greatest of the percentages mentioned in paragraphs (1)(a), (b) and (c).

275‑45  Meaning of managed investment trust—every member of trust is a managed investment trust etc.

             (1)  A trust is covered under this section in relation to an income year if:

                     (a)  the condition in paragraph 275‑10(3)(a) is satisfied; and

                     (b)  the condition in paragraph 275‑10(3)(b) is satisfied; and

                     (c)  either:

                              (i)  the only *members of the trust are entities that are covered by subsection 275‑20(4) (other than entities mentioned in paragraph 275‑20(4)(f)); or

                             (ii)  the only members of the trust are entities that are *managed investment trusts in relation to the income year because of subsection 275‑10(2); and

                     (d)  the trust satisfies the licensing requirements in section 275‑35 in relation to the income year.

             (2)  A requirement in paragraph (1)(a) is satisfied if, and only if, it is satisfied:

                     (a)  at the time the trustee of the trust makes the first *fund payment in relation to the income year; or

                     (b)  if the trustee does not make such a payment in relation to the income year—at both the start and the end of the income year.

275‑50  Extended definition of managed investment trust—no fund payment made in relation to the income year

                   A trust is covered under this section in relation to an income year if:

                     (a)  the trustee of the trust does not make a *fund payment in relation to the income year; and

                     (b)  the trust would be a *managed investment trust in relation to the income year if the trustee of the trust had made the first fund payment in relation to the income year on the first day of the income year when it was in existence; and

                     (c)  the trust would be a managed investment trust in relation to the income year if the trustee of the trust had made the first fund payment in relation to the income year on the last day of the income year on which it was in existence.

275‑55  Extended definition of managed investment trust—temporary circumstances outside the control of the trustee

                   A trust is covered under this section in relation to an income year if:

                     (a)  apart from a particular circumstance, the trust would be a *managed investment trust in relation to the income year; and

                     (b)  the circumstance is temporary; and

                     (c)  the circumstance arose outside the control of the trustee of the trust; and

                     (d)  it is fair and reasonable to treat the trust as a managed investment trust in relation to the income year, having regard to the following matters:

                              (i)  the matters in paragraphs (a) and (b);

                             (ii)  the nature of the circumstance;

                            (iii)  the actions (if any) taken by the trustee of the trust to address or remove the circumstance, and the speed with which such actions are taken;

                            (iv)  the extent to which treating the trust as a managed investment trust in relation to the income year would increase or reduce the amount of tax otherwise payable by the trustee, the *members of the trust or any other entity;

                             (v)  any other relevant matter.

Subdivision 275‑BChoice for capital treatment of managed investment trust gains and losses

Table of sections

275‑100    Consequences of making choice—CGT to be primary code for calculating MIT gains or losses

275‑105    Covered assets

275‑110    MIT not to be trading trust

275‑115    MIT CGT choices

275‑120    Consequences of not making choice—revenue account treatment

275‑100  Consequences of making choice—CGT to be primary code for calculating MIT gains or losses

             (1)  The modifications in subsection (2) apply if:

                     (a)  a *CGT event happens at a time involving a *CGT asset; and

                     (b)  the CGT asset is owned at that time by an entity that is a *managed investment trust in relation to the income year in which the time occurs; and

                     (c)  the CGT event happens because the managed investment trust *disposes of, ceases to own or otherwise realises the asset; and

                     (d)  the asset is covered by section 275‑105; and

                     (e)  the entity meets the requirement in section 275‑110 at the time; and

                      (f)  a choice under section 275‑115 covering the entity is in force for the income year in which the time occurs.

          (1A)  Without limiting paragraph (1)(b), if:

                     (a)  a *VCLP or an *ESVCLP owns a *CGT asset at the time referred to in that paragraph; and

                     (b)  at that time, the *managed investment trust has an interest in the asset as a *limited partner of the VCLP or ESVCLP;

for the purposes of that paragraph, the managed investment trust is taken to own the asset to the extent of that interest.

             (2)  These provisions do not apply to the *CGT event:

                     (a)  sections 6‑5 (about *ordinary income), 8‑1 (about amounts you can deduct), and 15‑15 and 25‑40 (about profit‑making undertakings or plans);

                     (b)  sections 25A and 52 of the Income Tax Assessment Act 1936 (about profit‑making undertakings or schemes);

                     (c)  section 118‑20 (about reducing capital gains if amount otherwise assessable);

                     (d)  Division 70 and section 118‑25 (about trading stock).

General exceptions

             (3)  The provisions referred to in subsection (2) can apply to the *CGT event if a *capital gain or *capital loss from the event is disregarded because of one of the provisions in this table:

 

Where gain or loss disregarded because of CGT provision

Item

Provision

Brief description

1

Paragraph 104‑15(4)(a)

Title in a CGT asset does not pass when a hire purchase or similar agreement ends

2

Section 118‑13

Shares in a PDF

3

Section 118‑60

Certain gifts

Trading stock and profit‑making undertakings or plans involving land etc.

             (4)  The provisions referred to in subsection (2) can also apply to the *CGT event if:

                     (a)  where the *CGT asset is land (including an interest in land), or a right or option to *acquire or *dispose of land (including an interest in land):

                              (i)  the CGT asset is *trading stock; or

                             (ii)  the circumstances existing at the time of the event would, disregarding this Subdivision, give rise to an amount being included in the assessable income of the entity under section 15‑15 or to a deduction for the entity under section 25‑40 (about profit‑making undertakings or plans); or

                     (b)  where paragraph (a) does not apply:

                              (i)  the *managed investment trust acquired the CGT asset in an income year for which the choice mentioned in paragraph (1)(f) was not in force; and

                             (ii)  the CGT asset was treated as trading stock in the managed investment trust’s financial report for the most recent income year ending before the start of the income year in which that choice first came into force; and

                            (iii)  the CGT asset was treated as trading stock in the *income tax return for the managed investment trust for the most recent income year ending before the start of the income year in which that choice first came into force; and

                            (iv)  the CGT asset was treated as trading stock in the managed investment trust’s financial report for the most recent income year ending before the time of the event; and

                             (v)  the CGT asset was treated as trading stock in the income tax return for the managed investment trust for the most recent income year ending before the time of the event.

Treatment of outgoings to acquire trading stock

             (5)  The modifications in subsection (6) apply if:

                     (a)  an entity that is a *managed investment trust in relation to the income year *acquires a *CGT asset at a time in that income year; and

                     (b)  the CGT asset is an item of *trading stock; and

                     (c)  the CGT asset is not land (including an interest in land), or a right or option to acquire or *dispose of land (including an interest in land); and

                     (d)  the entity incurs an outgoing in connection with acquiring the asset; and

                     (e)  the asset is covered by section 275‑105; and

                      (f)  the entity meets the requirement in section 275‑110 at the time; and

                     (g)  a choice under section 275‑115 covering the entity is in force for the income year in which the time occurs.

             (6)  The modifications are as follows:

                     (a)  section 8‑1 (about amounts you can deduct) does not apply to the *acquisition;

                     (b)  Division 70 (about trading stock) does not apply in relation to the asset in respect of:

                              (i)  the income year in which the time occurs; and

                             (ii)  any later income year in relation to which the entity is a *managed investment trust and throughout which the entity meets the requirement in section 275‑110.

275‑105  Covered assets

             (1)  An asset is covered by this section if it is any of the following:

                     (a)  a *share in a company (including a share in a *foreign hybrid company);

                     (b)  a *non‑share equity interest in a company;

                     (c)  a unit in a unit trust;

                     (d)  land (including an interest in land);

                     (e)  a right or option to *acquire or *dispose of an asset of a kind mentioned in paragraph (a), (b), (c) or (d).

             (2)  However, the asset is not covered by this section if it is any of the following:

                     (a)  a *Division 230 financial arrangement;

                     (b)  a *debt interest.

275‑110  MIT not to be trading trust

             (1)  An entity that is a trust meets the requirement in this section at a time if the entity is not, at that time, a trading trust for the purposes of Division 6C of Part III of the Income Tax Assessment Act 1936 in relation to that income year.

             (2)  If, apart from a particular circumstance, a trust would meet the requirement in subsection (1) at a time, the trust also meets the requirement in this section at a time if:

                     (a)  the circumstance is temporary; and

                     (b)  the circumstance arose outside the control of the trustee of the trust; and

                     (c)  the trustee of the trust is not liable to pay income tax on the net income of the trust under section 102S of the Income Tax Assessment Act 1936 for the income year in which the time occurs; and

                     (d)  it is fair and reasonable to treat the trust as meeting the requirement in this section at that time, having regard to the following matters:

                              (i)  the matters in paragraphs (a), (b) and (c);

                             (ii)  the nature of the circumstance;

                            (iii)  the actions (if any) taken by the trustee of the trust to address or remove the circumstance, and the speed with which such actions are taken;

                            (iv)  the extent to which treating the trust as meeting the requirement in this section at that time would increase or reduce the amount of tax otherwise payable by the trustee, the beneficiaries of the trust or any other entity;

                             (v)  any other relevant matter.

275‑115  MIT CGT choices

             (1)  The trustee of an entity that is a *managed investment trust may make a choice under this section that covers the managed investment trust.

             (2)  The choice must be made in the *approved form.

             (3)  The choice can be made only:

                     (a)  if the entity became a *managed investment trust in the 2009‑10 income year or a later income year (whether or not the entity existed before it became a managed investment trust)—on or before the latest of the following days:

                              (i)  the day it is required to lodge its *income tax return for the income year in which it became a managed investment trust;

                             (ii)  if the Commissioner allows a later day for the managed investment trust—that later day; or

                     (b)  otherwise—on or before the latest of the following days:

                              (i)  the last day in the 3 month period starting on the day on which this section commences;

                             (ii)  the last day of the 2009‑10 income year;

                            (iii)  if the Commissioner allows a later day for the managed investment trust—that later day.

             (4)  The choice, once made, cannot be revoked.

             (5)  The choice is in force:

                     (a)  in the circumstances mentioned in paragraph (3)(a)—for the income year in which the entity became a *managed investment trust (whether or not the entity existed before it became a managed investment trust) and later income years; or

                     (b)  in the circumstances mentioned in paragraph (3)(b)—for the 2008‑09 income year and later income years.

275‑120  Consequences of not making choice—revenue account treatment

             (1)  This section applies if:

                     (a)  the requirements in subsection 275‑100(1) are met in relation to a *CGT asset held by a *managed investment trust, apart from the requirement in paragraph 275‑100(1)(f); and

                     (b)  the CGT asset is not:

                              (i)  land (including an interest in land); or

                             (ii)  a right or option to *acquire or *dispose of land (including an interest in land); and

                     (c)  the managed investment trust disposes of, ceases to own or otherwise realises the asset; and

                     (d)  disregarding this section:

                              (i)  the net proceeds (if any) from the disposal, cessation or realisation would not be reflected in an amount being included in the assessable income of the managed investment trust (other than under Part 3‑1 or 3‑3); and

                             (ii)  the gain or profit (if any) on the disposal, cessation or realisation would not be reflected in an amount being included in the assessable income of the managed investment trust (other than under Part 3‑1 or 3‑3); and

                            (iii)  the loss (if any) on the disposal, cessation or realisation would not be reflected in an amount being deductible by the managed investment trust.

             (2)  For the purposes of this Act, treat the disposal, cessation of ownership of or realisation of the asset in the same way as the disposal, cessation of ownership of or realisation of a *revenue asset.

Subdivision 275‑CCarried interests in managed investment trusts

Table of sections

275‑200    Gains and losses etc. from carried interests in managed investment trusts reflected in assessable income or deduction

275‑200  Gains and losses etc. from carried interests in managed investment trusts reflected in assessable income or deduction

             (1)  This section applies if:

                     (a)  you hold a *CGT asset in an income year that carries an entitlement to a distribution from an entity; and

                     (b)  the entitlement to such a distribution is contingent upon the attainment of profits by the entity; and

                     (c)  the entity satisfies any of these requirements:

                              (i)  it is a *managed investment trust in relation to the income year;

                             (ii)  it was a managed investment trust in relation to a previous income year; and

                     (d)  you acquired the asset because of services you or your *associate provided, or will provide, to the entity; and

                     (e)  you or your associate provided, or will provide, those services:

                              (i)  as a manager of the entity; or

                             (ii)  as an associate of a manager of the entity; or

                            (iii)  as an employee of a manager of the entity; or

                            (iv)  as an associate of an employee of a manager of the entity; and

                      (f)  any of the following apply:

                              (i)  you become entitled in the income year to such a distribution (regardless of whether the distribution is made immediately, or is to be made in the future);

                             (ii)  a *CGT event happens in relation to the asset in the income year.

          (1A)  For the purposes of paragraph (1)(c), in determining whether the entity satisfies any of the requirements mentioned in that paragraph:

                     (a)  disregard paragraph 275‑10(3)(b) (requirement of not being a trading trust etc.); and

                     (b)  disregard subsection 102T(16) of the Income Tax Assessment Act 1936 (exclusion of public trading trust etc.).

             (2)  Include in your assessable income for the income year:

                     (a)  the amount of the distribution (except to the extent that it represents a return of capital that you or your associate contributed in order for you to *acquire the asset); or

                     (b)  the amount of your gain or profit (if any) on the *CGT event.

             (3)  Subsection (2) does not apply to the extent that the amount is included in your assessable income as:

                     (a)  *ordinary income under section 6‑5; or

                     (b)  *statutory income under a section of this Act, other than a provision in Part 3‑1 or 3‑3.

             (4)  An amount to which subsection (2) applies is taken, for the purposes of the *income tax laws, to have a source in Australia. For the purposes of this subsection, disregard subsection (3).

             (5)  You are entitled to a deduction for the income year for the amount of your loss (if any) on the *CGT event.

             (6)  Subsection (5) does not apply to the extent that you can deduct the amount under another provision of this Act.

             (7)  Subdivision 115‑C does not apply to the amount of a distribution mentioned in subparagraph (1)(f)(i) if:

                     (a)  that amount is included in your assessable income under subsection (2); or

                     (b)  an amount referable to that amount is included in your assessable income under Division 6 of Part III of the Income Tax Assessment Act 1936.

Subdivision 275‑LModification for non‑arm’s length income

Guide to Subdivision 275‑L

275‑600  What this Subdivision is about

The trustee of a managed investment trust in relation to an income year is taxed on amounts related to the managed investment trust’s non‑arm’s length income for the income year.

Table of sections

Operative provisions

275‑605    Trustee taxed on amount of non‑arm’s length income of managed investment trust

275‑610    Non‑arm’s length income

275‑615    Commissioner’s determination in relation to amount of non‑arm’s length income

Operative provisions

275‑605  Trustee taxed on amount of non‑arm’s length income of managed investment trust

             (1)  Subsections (2), (3) and (4) apply if the Commissioner has made a determination under section 275‑615 that specifies an amount of *non‑arm’s length income for a specified *managed investment trust in relation to a specified income year.

Excess amount to be taxed

             (2)  The trustee of the *managed investment trust is liable to pay income tax at the rate declared by the Parliament on the amount mentioned in subsection (5).

Note:          The rate is set out in subsection 12(10) of the Income Tax Rates Act 1986.

Excess amount to be adjusted

             (3)  If the trust is an *AMIT for the income year:

                     (a)  if paragraph (b) does not apply—treat the trust as having an *over in the income year in which the determination is made, for the specified income year, of a character relating to *ordinary income, or *statutory income, from an *Australian source, equal to the amount mentioned in subsection (5); or

                     (b)  if the trust already has such an over in the income year in which the determination is made, for the specified income year—increase the amount of that over by the amount mentioned in subsection (5).

             (4)  If the trust is not an *AMIT for the income year, reduce the trust’s *net income for the income year in which the determination is made by the amount mentioned in subsection (5), to the extent that the net income is attributable to that amount.

Excess amount

             (5)  The amount is the excess mentioned in paragraph 275‑610(1)(b) in respect of the *non‑arm’s length income, reduced by deductions (if any) that:

                     (a)  are reflected in:

                              (i)  if the trust is an *AMIT for the income year—the amounts of its *trust components for the income year (disregarding subsection (3)); or

                             (ii)  otherwise—its *net income for the income year (disregarding subsection (4)); and

                     (b)  are attributable only to the amount of non‑arm’s length income.

275‑610  Non‑arm’s length income

             (1)  An amount of *ordinary income or *statutory income is non‑arm’s length income of a *managed investment trust if:

                     (a)  it is derived from a *scheme the parties to which were not dealing with each other at *arm’s length in relation to the scheme; and

                     (b)  that amount exceeds the amount that the entity might have been expected to derive if those parties had been dealing with each other at arm’s length in relation to the scheme; and

                     (c)  the amount is none of the following:

                              (i)  a distribution from a *corporate tax entity;

                             (ii)  a distribution from a trust that is not a party to the scheme mentioned in paragraph (a);

                            (iii)  a *return covered by subsection (2).

             (2)  This subsection covers a *return that an entity pays or provides on a *debt interest, if the rate (expressed on an annual basis) of the return does not exceed the greater of:

                     (a)  the *benchmark rate of return for the interest; and

                     (b)  the *base interest rate for the day on which the return is paid or provided, plus 3 percentage points.

             (3)  Subsection (4) applies if:

                     (a)  an amount would be *non‑arm’s length income of the *managed investment trust (disregarding that subsection); and

                     (b)  the amount is a distribution from a trust, or a share of the *net income of a trust, if the trust is a party to the scheme mentioned in paragraph (1)(a).

             (4)  The amount is *non‑arm’s length income of the *managed investment trust only to the extent that the distribution or share of *net income is attributable to non‑arm’s length income of the trust mentioned in paragraph (3)(b) (on that assumption that the trust were a managed investment trust) because of another operation of this section.

             (5)  Subsection (6) applies if:

                     (a)  an amount (the first amount) of *ordinary income or *statutory income of the *managed investment trust that would be *non‑arm’s length income of the managed investment trust (disregarding that subsection) is:

                              (i)  a distribution from a trust that is a party to the scheme mentioned in paragraph (1)(a); or

                             (ii)  a share of the *net income of a trust that is a party to that scheme; and

                     (b)  another amount (the second amount) of ordinary income or statutory income of the managed investment trust is:

                              (i)  a distribution from another trust (whether or not the other trust is a party to that scheme); or

                             (ii)  a share of the net income of another trust (whether or not the other trust is a party to that scheme); and

                     (c)  it is reasonable to conclude that the second amount would have been higher but for the first amount.

             (6)  The first amount is not *non‑arm’s length income of the *managed investment trust to the extent that the second amount would have been higher as mentioned in paragraph (5)(c).

275‑615  Commissioner’s determination in relation to amount of non‑arm’s length income

             (1)  The Commissioner may make a determination in writing that specifies an amount of *non‑arm’s length income for a specified *managed investment trust in relation to a specified income year if the Commissioner is satisfied that:

                     (a)  the amount of non‑arm’s length income for the managed investment trust in relation to the income year is reflected in:

                              (i)  if the trust is an *AMIT for the income year—one or more of its *trust components for the income year; or

                             (ii)  otherwise—its *net income for the income year; and

                     (b)  the managed investment trust is a party to the *scheme mentioned in paragraph 275‑610(1)(a) at a time in the income year in which the amount is derived; and

                     (c)  at least one the parties to that scheme is not a managed investment trust in relation to the income year.

Determination does not form part of assessment

             (2)  A determination under subsection (1) does not form part of an assessment.

Notice by Commissioner of determination

             (3)  If the Commissioner makes a determination under subsection (1), the Commissioner must give a copy of the determination to the *managed investment trust concerned.

Evidence of determination

             (4)  The production of:

                     (a)  a notice of a determination; or

                     (b)  a document signed by the Commissioner, a Second Commissioner or a Deputy Commissioner purporting to be a copy of a determination;

is:

                     (c)  conclusive evidence of the due making of the determination; and

                     (d)  conclusive evidence that the determination is correct (except in proceedings under Part IVC of the Taxation Administration Act 1953 on an appeal or review relating to the determination).

Objections

             (5)  If an entity to whom a determination relates is dissatisfied with the determination, the entity may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

Division 276Australian managed investment trusts: attribution managed investment trusts

Table of Subdivisions

             Guide to Division 276

276‑A   What is an attribution managed investment trust?

276‑B    Member’s vested and indefeasible interest in share of income and capital of AMIT

276‑C    Taxation etc. of member components

276‑D   Member components

276‑E    Trust components

276‑F    Unders and overs

276‑G   Shortfall and excess taxation

276‑H   AMMA statements

276‑J    Debt‑like trust instruments

276‑K   Ceasing to be an AMIT

Guide to Division 276

276‑1  What this Division is about

A managed investment trust in relation to an income year is an attribution managed investment trust (or AMIT) for the income year if certain criteria are satisfied. In particular, for the trust to be an AMIT, the interests of the members of the trust need to be clearly defined at all times during which the trust is in existence in the income year (see Subdivision 276‑A).

An AMIT for an income year is treated as a fixed trust. A member of the AMIT in respect of the income year is treated as having a vested and indefeasible interest in a share of the income and capital of the AMIT throughout the income year (see Subdivision 276‑B).

Amounts related to income and tax offsets of an AMIT, determined by the trustee to be of a particular tax character, are attributed to members, generally retaining that tax character (see Subdivision 276‑C).

Underestimates and overestimates of amounts at the trust level are carried forward and dealt with in later years. This is done on a character‑by‑character basis. An underestimate in an income year of a particular character results in an under of that character. An overestimate results in an over of that character. Unders and overs arise, and are dealt with, in the income year in which they are discovered (see Subdivision 276‑F).

The trustee of an AMIT is liable to pay income tax on certain amounts reflecting under‑attribution of income or over‑attribution of tax offsets (see Subdivision 276‑G).

Special rules apply to a trust that ceases to be an AMIT (see Subdivision 276‑K).

Subdivision 276‑AWhat is an attribution managed investment trust?

Guide to Subdivision 276‑A

276‑5  What this Subdivision is about

A managed investment trust in relation to an income year is an attribution managed investment trust (or AMIT) for the income year if certain criteria are satisfied. In particular:

       (a)     the interests of the members of the trust need to be clearly defined at all times when the trust is in existence in the income year; and

      (b)     the trustee of the trust needs to have made a choice for the trust to be an AMIT in respect of that income year or an earlier income year.

Table of sections

Operative provisions

276‑10      Meaning of attribution managed investment trust (or AMIT)

276‑15      Clearly defined interests

276‑20      Trust with classes of membership interests—each class treated as separate AMIT

Operative provisions

276‑10  Meaning of attribution managed investment trust (or AMIT)

             (1)  A trust is an attribution managed investment trust (or AMIT) for an income year if:

                     (a)  the trust is a *managed investment trust in relation to the income year; and

                     (b)  the rights to income and capital arising from each of the *membership interests in the trust are clearly defined (see section 276‑15) at all times when the trust is in existence in the income year; and

                     (c)  if the trust is a managed investment trust in relation to the income year solely because of paragraph 275‑10(1)(b)—the only members of the trust are managed investment trusts in relation to the income year; and

                     (d)  if the regulations specify criteria for the purposes of this paragraph—those criteria are satisfied in relation to the trust; and

                     (e)  either:

                              (i)  the trustee of the trust has made a choice for the purposes of this subparagraph in respect of that income year; or

                             (ii)  the trust was an AMIT for an earlier income year.

             (2)  A choice for the purposes of subparagraph (1)(e)(i) cannot be revoked.

276‑15  Clearly defined interests

             (1)  Without limiting the circumstances in which the rights to income and capital arising from the *membership interests in a trust are clearly defined for the purposes of paragraph 276‑10(1)(b), treat such rights as being clearly defined at a particular time for those purposes if any of the following conditions are satisfied at that time:

                     (a)  the trust is registered under section 601EB of the Corporations Act 2001;

                     (b)  the rights to income and capital arising from each of the membership interests in the trust are the same.

             (2)  For the purposes of working out whether the condition in paragraph (1)(b) is satisfied, disregard the following:

                     (a)  fees or charges imposed by the trustee on the *members of the trust;

                     (b)  issue and redemption prices of *membership interests in the trust;

                     (c)  exposure of the membership interests in the trust to foreign exchange gains and losses.

276‑20  Trust with classes of membership interests—each class treated as separate AMIT

             (1)  Subsections (2) and (3) apply if:

                     (a)  the *membership interests in an *AMIT for an income year are divided into classes; and

                     (b)  the rights arising from each of those membership interests in a particular class are the same as the rights arising from every other of those membership interests in that class; and

                     (c)  each of those membership interests in a particular class is distinct from each of those membership interests in another class; and

                     (d)  the trustee of the AMIT has made a choice for the purposes of this paragraph that applies to the income year.

             (2)  For the purposes of this Division (other than this Subdivision), treat each class of those *membership interests in the *AMIT as being a separate AMIT for that income year.

             (3)  For the purposes of this Division, allocate assessable income, *exempt income, *non‑assessable non‑exempt income, *tax losses, *net capital losses and other similar amounts in respect of the *AMIT between each of the separate classes mentioned in subsection (1) on a fair and reasonable basis.

Making of choice by trustee

             (4)  A choice for the purposes of paragraph (1)(d) applies to the income year for which it is made and every subsequent income year.

             (5)  A choice for the purposes of paragraph (1)(d) cannot be revoked.

Subdivision 276‑BMember’s vested and indefeasible interest in share of income and capital of AMIT

Guide to Subdivision 276‑B

276‑50  What this Subdivision is about

An AMIT for an income year is treated as a fixed trust. A member of the AMIT in respect of the income year is treated as having a vested and indefeasible interest in a share of the income and capital of the AMIT throughout the income year.

Table of sections

Operative provisions

276‑55      AMIT taken to be fixed trust and member taken to have vested and indefeasible interest in income and capital

Operative provisions

276‑55  AMIT taken to be fixed trust and member taken to have vested and indefeasible interest in income and capital

                   For the purposes of this Act:

                     (a)  treat an *AMIT for an income year as a *fixed trust; and

                     (b)  treat an entity that is a *member of the AMIT in respect of the income year as having a vested and indefeasible interest in a share of the income and capital of the AMIT throughout the income year.

Subdivision 276‑CTaxation etc. of member components

Guide to Subdivision 276‑C

276‑75  What this Subdivision is about

Amounts related to income and tax offsets of an AMIT, of a particular tax character, are attributed to members of the AMIT on the basis of their determined member components of that tax character.

This attribution does not apply to the extent that amounts have been withheld etc. in relation to those components under Subdivision 12‑F, 12‑H or 12A‑C in Schedule 1 to the Taxation Administration Act 1953.

The trustee of an AMIT that is not a withholding MIT may be liable to pay income tax in respect of a determined member component of a foreign resident member (including where that member is acting in the capacity of a trustee). As a result, the member may be entitled to a tax offset.

Table of sections

Taxation etc. of member on determined member components

276‑80      Member’s assessable income or tax offsets for determined member components—general rules

276‑85      Member’s assessable income or tax offsets for determined member components—specific rules

276‑90      Commissioner’s determination as to status of member as qualified person

276‑95      Relationship between section 276‑80 and withholding rules

276‑100    Relationship between section 276‑80 and other charging provisions in this Act

Foreign resident members—taxation of trustee and corresponding tax offset for members

276‑105    Trustee taxed on foreign resident’s determined member components

276‑110    Refundable tax offset for foreign resident member—member that is not a trustee

Special rule for interposed custodian

276‑115    Custodian interposed between AMIT and member

Taxation etc. of member on determined member components

276‑80  Member’s assessable income or tax offsets for determined member components—general rules

Components of income character

             (1)  Subsection (2) applies if a *member of an *AMIT in respect of an income year has, for the income year, a *determined member component of:

                     (a)  a character relating to assessable income; or

                     (b)  a character relating to *exempt income; or

                     (c)  a character relating to *non‑assessable non‑exempt income.

             (2)  For the purpose of working out the effects mentioned in subsection (3) for the *member, treat the member as having derived, received or made the amount reflected in the *determined member component:

                     (a)  in the member’s own right (rather than as a member of a trust); and

                     (b)  in the same circumstances as the *AMIT derived, received or made that amount, to the extent that those circumstances gave rise to the particular character of that component.

             (3)  The effects are as follows:

                     (a)  including an amount in the assessable income of the *member;

                     (b)  including an amount in the *exempt income of the member;

                     (c)  including an amount in the *non‑assessable non‑exempt income of the member;

                     (d)  determining whether the member has made a *capital gain from a *CGT event;

                     (e)  determining the extent to which the member’s *net capital loss has been *utilised.

Components of tax offset character

             (4)  Subsection (5) applies if a *member of an *AMIT in respect of an income year has, for the income year, a *determined member component of a character relating to a *tax offset.

             (5)  For the purpose of working out the effects mentioned in subsection (6) for the *member, treat the member as having paid or received the amount reflected in the *determined member component:

                     (a)  in the member’s own right (rather than as a member of a trust); and

                     (b)  in the same circumstances as the *AMIT paid or received that amount.

             (6)  The effects are as follows:

                     (a)  entitling the member to a *tax offset;

                     (b)  entitling the member to a credit under Division 18 in Schedule 1 to the Taxation Administration Act 1953.

276‑85  Member’s assessable income or tax offsets for determined member components—specific rules

             (1)  This section makes clarifications and modifications of the operation of section 276‑80 in respect of a *member of an *AMIT in respect of an income year.

             (2)  For the purposes of this Act, if an amount is included in the *member’s assessable income because of the operation of this section, treat that amount as being so included because of the operation of subsection 276‑80(2).

Discount capital gains

             (3)  Subsection (4) applies if the *member has, for the income year, a *determined member component of the character of:

                     (a)  a *discount capital gain from a *CGT asset that is *taxable Australian property; or

                     (b)  a discount capital gain from a CGT asset that is not taxable Australian property.

             (4)  For the purposes of section 276‑80 and this section, treat the amount of the component as being double what it would be apart from this subsection.

Franking credit gross‑up

             (5)  Subsection (6) applies if the *member has, for the income year, a *determined member component (the franking credit gross‑up component) of the character of assessable income under subsection 207‑20(1) (franking credit gross‑up).

             (6)  For the purposes of subsection 207‑20(1) (franking credit gross‑up), treat the reference in that subsection to the amount of the *franking credit on the distribution as instead being a reference to the amount of the franking credit gross‑up component.

Limitation on circumstances in paragraph 276‑80(2)(b)

             (7)  The circumstances mentioned in paragraph 276‑80(2)(b) or (5)(b) do not include the following:

                     (a)  the residence of the trustee of the *AMIT;

                     (b)  the place of the central management and control of the AMIT.

276‑90  Commissioner’s determination as to status of member as qualified person

             (1)  Subsection (2) applies to a *member of an *AMIT in respect of an income year if:

                     (a)  the AMIT is specified in a determination under subsection (3); and

                     (b)  the income year is specified in the determination; and

                     (c)  the member:

                              (i)  is specified in the determination; or

                             (ii)  is included in a class of members specified in the determination.

             (2)  Treat the *member as not being a qualified person in relation to a distribution in relation to the *AMIT for the income year, for the purposes of Division 1A of former Part IIIAA of the Income Tax Assessment Act 1936.

             (3)  For the purposes of this section, the Commissioner may make a determination in writing that identifies any of the following:

                     (a)  a specified *member of a specified *AMIT;

                     (b)  a specified class of members of a specified AMIT.

             (4)  The determination may specify one or more income years.

             (5)  In deciding whether to make a determination under subsection (3), the Commissioner may have regard to any of the following:

                     (a)  arrangements (if any) entered into by the *member that directly or indirectly reduce the economic exposure of the member to changes in the value of the *membership interests held by the member in the *AMIT;

                     (b)  the lack of such arrangements;

                     (c)  the length of time that the member has been a member of the AMIT;

                     (d)  any other matter that the Commissioner considers relevant.

             (6)  A determination under subsection (3) is not a legislative instrument.

             (7)  If an entity to whom a determination relates is dissatisfied with the determination, the entity may object against it in the manner set out in Part IVC of the Taxation Administration Act 1953.

276‑95  Relationship between section 276‑80 and withholding rules

             (1)  Subsection 276‑80(2) does not apply to the extent that the *determined member component is reflected in an *AMIT DIR payment or a *fund payment, if an amount in respect of the payment:

                     (a)  has been withheld from the payment under Subdivision 12‑F or 12‑H in Schedule 1 to the Taxation Administration Act 1953; or

                     (b)  would be so withheld apart from an exemption from a requirement to withhold under Subdivision 12‑F in that Schedule; or

                     (c)  has been paid under Division 12A in that Schedule; or

                     (d)  would be so paid apart from an exemption from a requirement to withhold under Subdivision 12‑F in that Schedule.

             (2)  However, if the *determined member component is reflected in a *fund payment, subsection (1) applies only to the extent to which an amount attributable to the fund payment is treated under section 840‑815 as not assessable income and not *exempt income.

             (3)  Subsection 276‑80(2) does not affect the operation of the following:

                     (a)  Division 11A of Part III of the Income Tax Assessment Act 1936;

                     (b)  Subdivision 840‑M of this Act;

                     (c)  Division 12 in Schedule 1 to the Taxation Administration Act 1953.

Note:          See Division 12A in Schedule 1 to the Taxation Administration Act 1953 for provisions about withholding tax that apply specifically to AMITs.

276‑100  Relationship between section 276‑80 and other charging provisions in this Act

             (1)  This section applies if:

                     (a)  an amount is included in the assessable income of a *member of an *AMIT in respect of an income year in respect of the member’s interest in the AMIT; and

                     (b)  that amount is so included otherwise than because of the operation of subsection 276‑80(2).

             (2)  Reduce the amount included in the assessable income of the *member as mentioned in subsection (1) to the extent (if any) that a corresponding amount is included in the assessable income of the member in respect of the member’s interest in the *AMIT because of the operation of subsection 276‑80(2).

             (3)  To avoid doubt, this section is subject to section 230‑20 (financial arrangements).

Foreign resident memberstaxation of trustee and corresponding tax offset for members

276‑105  Trustee taxed on foreign resident’s determined member components

             (1)  This section applies if:

                     (a)  a *member of an *AMIT in respect of an income year has, for the income year, a *determined member component of a character relating to assessable income in respect of the AMIT; and

                     (b)  either:

                              (i)  unless subparagraph (ii) applies—the member is a foreign resident at the end of the income year; or

                             (ii)  if the member is, in respect of that determined member component, a beneficiary in the capacity of a trustee of another trust—a trustee of the other trust is a foreign resident at the end of the income year; and

                     (c)  the AMIT is not a *withholding MIT.

             (2)  The trustee of the *AMIT is to be assessed and is liable to pay income tax:

                     (a)  if subparagraph (1)(b)(i) applies and the *member is not a company—in respect of the amount mentioned in subsection (3) as if it were the income of an individual and were not subject to any deduction; or

                     (b)  if subparagraph (1)(b)(i) applies and the member is a company—in respect of the amount mentioned in subsection (3) at the rate declared by the Parliament for the purposes of this paragraph; or

                     (c)  if subparagraph (1)(b)(ii) applies—in respect of the amount mentioned in subsection (4) or (5) at the rate declared by the Parliament for the purposes of this paragraph.

Note:          The rates are set out in the following provisions:

(a)    for paragraph (a)—subsection 12(6A) of the Income Tax Rates Act 1986 and Schedule 10A to that Act;

(b)    for paragraph (b)—paragraph 28A(a) of that Act;

(c)    for paragraph (c)—paragraph 28A(b) of that Act.

             (3)  The amount is the *determined member component, to the extent that the component:

                     (a)  is attributable to a period when the *member was an Australian resident; or

                     (b)  is attributable to a period when the member was not an Australian resident and is attributable to sources in Australia.

             (4)  The amount is the *determined member component, to the extent that the component is attributable to sources in Australia.

             (5)  For the purposes of subsection (4), treat the entire amount of the *determined member component as not being attributable to sources in Australia if it is of the character of:

                     (a)  a *discount capital gain from a *CGT asset that is not *taxable Australian property; or

                     (b)  a *capital gain (other than a discount capital gain) from a CGT asset that is not taxable Australian property.

Exception for component reflected in AMIT DIR payment or fund payment

             (6)  Subsection (2) does not apply to the extent that the *determined member component is reflected in an *AMIT DIR payment or a *fund payment, if an amount in respect of the payment:

                     (a)  has been withheld from the payment under Subdivision 12‑F or 12‑H in Schedule 1 to the Taxation Administration Act 1953; or

                     (b)  would be so withheld apart from an exemption from a requirement to withhold under Subdivision 12‑F in that Schedule; or

                     (c)  has been paid under Division 12A in that Schedule; or

                     (d)  would be so paid apart from an exemption from a requirement to withhold under Subdivision 12‑F in that Schedule.

Gross‑up for discount capital gain

             (7)  Subsection (8) applies if a *determined member component is of the character of:

                     (a)  a *discount capital gain from a *CGT asset that is *taxable Australian property; or

                     (b)  a discount capital gain from a CGT asset that is not taxable Australian property.

             (8)  For the purposes of this section, treat the amount of the component as being double what it would be apart from this subsection.

276‑110  Refundable tax offset for foreign resident member—member that is not a trustee

             (1)  This section applies if a trustee is assessed and liable to pay income tax under section 276‑105 in respect of a *member because of paragraph 276‑105(2)(a) or (b).

             (2)  The *member is entitled to a *tax offset for the income year equal to the tax paid by the trustee in accordance with subsection 276‑105(2).

Note:          The tax offset is subject to the refundable tax offset rules: see section 67‑23.

Special rule for interposed custodian

276‑115  Custodian interposed between AMIT and member

             (1)  This section applies if:

                     (a)  a trust that is a *custodian is a *member of an *AMIT in respect of an income year; and

                     (b)  the custodian has, for the income year, a *determined member component of a particular character for the AMIT; and

                     (c)  the custodian is interposed between the AMIT and another entity (the subsequent recipient); and

                     (d)  the subsequent recipient:

                              (i)  starts to have, at a time in the income year, an entitlement to an amount that is reasonably attributable to all or part of the determined member component; or

                             (ii)  would start to have, at a time in the income year, such an entitlement if the determined member component were an actual payment of an amount.

             (2)  For the purposes of this Subdivision, reduce the *custodian’s *determined member component by the amount of the entitlement mentioned in subparagraph (1)(d)(i) or (ii).

Note:          This subsection may operate to reduce the amount of the determined member component multiple times if there is more than one subsequent recipient in respect of which the requirements in paragraphs (1)(c) and (d) are satisfied.

             (3)  For the purposes of this Subdivision:

                     (a)  treat the subsequent recipient as being a *member of the *AMIT in respect of the income year; and

                     (b)  treat the subsequent recipient as having, for the income year, a *determined member component for the AMIT that:

                              (i)  is of the character mentioned in paragraph (1)(b); and

                             (ii)  is equal to the amount of the entitlement mentioned in subparagraph (1)(d)(i) or (ii).

Subdivision 276‑DMember components

Guide to Subdivision 276‑D

276‑200  What this Subdivision is about

A member’s member component of a particular character is so much of an AMIT’s determined trust component of that character (see Subdivision 276‑E) as is attributable to membership interests held by the member, worked out in accordance with certain requirements.

A member’s determined member component of a particular character is the amount stated to be the member’s member component of that character in an AMMA statement (see Subdivision 276‑H).

Table of sections

Member‑level concepts

276‑205    Meaning of determined member component

276‑210    Meaning of member component

Member‑level concepts

276‑205  Meaning of determined member component

             (1)  The determined member component of a particular character for an income year of a *member of an *AMIT in respect of the income year is the amount of the member’s *member component of that character as reflected in the AMIT’s latest *AMMA statement for the member for the income year.

             (2)  Subsection (3) applies if:

                     (a)  the *member makes a choice for the purposes of this paragraph that complies with subsection (5); and

                     (b)  the member gives a copy of the choice to the Commissioner within 4 months after:

                              (i)  unless subparagraph (ii) applies—the end of the member’s income year; or

                             (ii)  if the *AMIT gives the member a revised *AMMA statement for the income year at a time after the end of that income year—that time; and

                     (c)  the member gives a notice of the choice, in accordance with subsection (7), to the trustee of the AMIT within those 4 months.

             (3)  Despite subsection (1), if the *determined member component of that character for the income year (disregarding this subsection) does not accord with subsections 276‑210(2), (3) and (4), that determined member component is instead the member’s *member component of that character for the income year.

             (4)  For the purposes of subsection (3), in working out the member’s *member component of that character for the income year, if the *trust component of that character differs from the *determined trust component of that character, treat the references in section 276‑210 to determined trust component as instead being references to trust component.

Example:    The determined trust component exceeds the trust component because of an unintentional mistake by the trustee of the AMIT. As a result, a member’s corresponding determined member component under subsection (1) exceeds what it would have been if the trustee had not made the mistake.

                   If the member makes a choice under subsection (2), the amount of the determined member component will be determined according to the amount of the trust component.

             (5)  The choice must:

                     (a)  be in writing; and

                     (b)  state the following matters:

                              (i)  the income year to which the choice relates;

                             (ii)  what the *member considers to be the member’s *member component of that character for the income year;

                            (iii)  the reason why the member considers that the *determined member component of that character for the income year does not accord with subsections 276‑210(2), (3) and (4).

             (6)  The way the *member’s *income tax return is prepared is sufficient evidence of the making of the choice.

             (7)  The notice must:

                     (a)  be in writing; and

                     (b)  state the matters mentioned in paragraph (5)(b).

276‑210  Meaning of member component

             (1)  This section applies to a *member of an *AMIT in respect of an income year and sets out how to work out the member’s *member components for the year.

Meaning of member component

             (2)  The *member’s member component of a character is so much of the *AMIT’s *determined trust component of that character as is attributable to the *membership interests in the AMIT held by the member, worked out in accordance with the requirements in subsections (3) and (4).

Attribution must be fair and reasonable and accord with constituent documents

             (3)  The attribution must be worked out on a fair and reasonable basis, in accordance with the constituent documents of the *AMIT. This requirement is subject to the requirement in subsection (4).

Attribution must not involve streaming of character amounts

             (4)  The attribution must not attribute any part of a *determined trust component of a particular character to a *member’s *membership interests because of the tax characteristics of the member.

Safe harbour rules

             (5)  Without limiting the scope of the requirements in subsection (3) and (4), an amount does not fail to be worked out in accordance with those requirements as mentioned in subsection (2) merely because the amount reflects the fact that:

                     (a)  the constituent documents of the *AMIT give the trustee of the AMIT the power to direct an amount arising from the sale of an asset to a particular *member, if:

                              (i)  the member redeems one or more *membership interests in the AMIT; and

                             (ii)  the direction of the amount is made to fund the redemption; and

                     (b)  the trustee exercises that power.

             (6)  Without limiting the scope of the requirements in subsection (3) and (4), an amount does not fail to be worked out in accordance with those requirements as mentioned in subsection (2) merely because the amount reflects the fact that:

                     (a)  either:

                              (i)  an amount of an *under, relating to a base year (as mentioned in subsection 276‑345(1)) increases a *trust component of the *AMIT for a later income year under section 276‑305; or

                             (ii)  an amount of an *over, relating to a base year (as mentioned in subsection 276‑345(1)) decreases a trust component of the AMIT for a later income year under section 276‑305; and

                     (b)  an entity is a *member of the AMIT at a time in the later income year, but was not a member of the AMIT in respect of the base year.

             (7)  Without limiting the scope of the requirements in subsection (3) and (4), an amount does not fail to be worked out in accordance with those requirements as mentioned in subsection (2) merely because the amount reflects the fact that:

                     (a)  the trustee made a *capital gain or *capital loss in an income year (for the purposes of working out the amount of a *trust component of the *AMIT for an income year in accordance with the rules in section 276‑265); and

                     (b)  an entity was a *member of the AMIT in respect of the income year, but was not a member of the AMIT at the time the capital gain or capital loss was made.

Subdivision 276‑ETrust components

Guide to Subdivision 276‑E

276‑250  What this Subdivision is about

An AMIT’s trust component of a particular character is worked out on the basis of the AMIT’s assessable income, exempt income, non‑assessable non‑exempt income and tax offsets (on the assumption that the AMIT were an Australian resident liable to pay tax).

An AMIT’s determined trust component of a particular character is the amount stated to be its trust component of that character in a document that meets certain requirements.

Table of sections

Trust‑level concepts

276‑255    Meaning of determined trust component

276‑260    Meaning of trust component

276‑265    Rules for working out trust components—general rules

276‑270    Rules for working out trust components—allocation of deductions

Trust‑level concepts

276‑255  Meaning of determined trust component

             (1)  An *AMIT’s determined trust component of a particular character for an income year is the amount stated to be its *trust component of that character in a document that meets the requirements in subsection (2).

             (2)  The requirements are as follows:

                     (a)  the document was created by the *AMIT;

                     (b)  the document states expressly the amount of the *trust component;

                     (c)  at a time after the document was created, the AMIT sent *AMMA statements for the income year to entities that were *members of the AMIT in respect of the income year;

                     (d)  the amount of the trust component stated in the document reflects the amount of the *determined member components reflected in those AMMA statements.

             (3)  If, apart from this subsection, there are 2 or more documents that meet the requirements in subsection (2), treat the most recently created of those documents as being the only document that meets those requirements.

Example:    The income year for the AMIT ends on 30 June. The trustee creates a document stating the amount for the income year on 1 July. It sends all AMMA statements on 10 July. The trustee creates another document stating a different amount for the income year on 1 September. It sends revised AMMA statements reflecting that amount on 10 September. The document created on 1 September is the only document that meets the requirements in this section in respect of the amount for the income year.

276‑260  Meaning of trust component

             (1)  The object of this section is to ensure that an *AMIT’s amounts of assessable income, *exempt income, *non‑assessable non‑exempt income and *tax offsets for an income year are allocated, according to their character, into separate components for the purposes of this Act.

             (2)  An *AMIT’s trust component for an income year:

                     (a)  of a character relating to assessable income; or

                     (b)  of a character relating to *exempt income; or

                     (c)  of a character relating to *non‑assessable non‑exempt income; or

                     (d)  of a character relating to a *tax offset;

is the amount of that character for the income year worked out for the AMIT in accordance with the rules in sections 276‑265 and 276‑270.

             (3)  This section is subject to Subdivision 276‑F (which deals with the effect of *unders and *overs).

             (4)  The rules in sections 276‑265 and 276‑270 apply only for the purposes of determining the amounts of *trust components.

276‑265  Rules for working out trust components—general rules

General taxability and residence assumptions to be made

             (1)  Work out the amount of the *trust component of each character in relation to the *AMIT assuming that the AMIT’s trustee:

                     (a)  was liable to pay *tax; and

                     (b)  was an Australian resident.

Trust components of assessable income character are net of deductions

             (2)  The sum of all of the *trust components of a character relating to assessable income of the *AMIT for the income year equals the total assessable income of the AMIT for the income year, reduced by all deductions of the AMIT for the year. To avoid doubt, for the purposes of this subsection, apply subsection (1).

             (3)  However, if that total assessable income does not exceed those deductions, the amount of each *trust component of a character relating to assessable income of the *AMIT for the income year is nil.

276‑270  Rules for working out trust components—allocation of deductions

             (1)  An amount of a deduction that relates directly only to one or more amounts of assessable income can be deducted only against that amount or those amounts of assessable income. If there are 2 or more such amounts of assessable income, the amount of the deduction is allocated against those amounts on a reasonable basis.

             (2)  If an amount of a deduction remains after applying the rules in subsection (1), the remainder can be deducted against other amounts of assessable income. The amount of the remainder is allocated against those amounts on a reasonable basis.

             (3)  For the purposes of this section, determine whether a deduction relates directly to an amount of assessable income on a reasonable basis.

Subdivision 276‑FUnders and overs

Guide to Subdivision 276‑F

276‑300  What this Subdivision is about

This Subdivision sets out how underestimates and overestimates of amounts at the trust level are carried forward and dealt with in later years. This is generally done on a character‑by‑character basis.

An underestimate in an income year of a particular character results in an under of that character. An overestimate results in an over of that character.

Unders and overs arise, and are dealt with, in the income year in which they are discovered.

Table of sections

Adjustment of trust component for unders and overs etc.

276‑305    Adjustment of trust component for unders and overs

276‑310    Rounding adjustment deficit increases trust component

276‑315    Rounding adjustment surplus decreases trust component

276‑320    Meaning of trust component deficit

276‑325    Trust component of character relating to assessable income—adjustment for cross‑character allocation amount, carry‑forward trust component deficit and FITO allocation amount

276‑330    Meaning of cross‑character allocation amount and carry‑forward trust component deficit

276‑335    Meaning of FITO allocation amount

276‑340    Trust component character relating to tax offset—taxation of trust component deficit

Unders and overs

276‑345    Meaning of under and over of a character

276‑350    Limited discovery period for unders and overs

Adjustment of trust component for unders and overs etc.

276‑305  Adjustment of trust component for unders and overs

Object

             (1)  The object of this section is to adjust an *AMIT’s *trust component of a particular character for an income year to take account of any *unders or *overs of that character that the AMIT has in the income year.

Unders increase trust component

             (2)  If the *AMIT has an *under of that character in the income year (relating to any earlier income year), increase the amount of the *trust component by that under.

Note:          Those earlier income years are referred to in section 276‑345 as base years.

Overs decrease trust component

             (3)  If the *AMIT has an *over of that character in the income year (relating to any earlier income year), decrease the amount of the *trust component by that over.

Note:          Those earlier income years are referred to in section 276‑345 as base years.

276‑310  Rounding adjustment deficit increases trust component

             (1)  If the *AMIT has a *rounding adjustment deficit of that character for the income year, increase the amount of the *trust component by the amount of that rounding adjustment deficit.

             (2)  The *AMIT has a rounding adjustment deficit of a particular character for an income year if:

                     (a)  the AMIT has a shortfall for the previous income year under subsection 276‑415(1); and

                     (b)  the shortfall results wholly or partly from the trustee of the AMIT rounding down amounts in working out *determined member components for the previous income year.

The amount of the rounding adjustment deficit is the amount of the shortfall, to the extent that it results from that rounding down.

276‑315  Rounding adjustment surplus decreases trust component

             (1)  If the *AMIT has a *rounding adjustment surplus of that character for the income year, decrease the amount of the *trust component by the amount of that rounding adjustment surplus.

             (2)  The *AMIT has a rounding adjustment surplus of a particular character for an income year if:

                     (a)  the AMIT has an excess for the previous income year under subsection (3); and

                     (b)  the excess results wholly or partly from the trustee of the AMIT rounding up amounts in working out *determined member components for the previous income year.

The amount of the rounding adjustment surplus is the amount of the excess, to the extent that it results from that rounding up.

             (3)  The *AMIT has an excess under this subsection for an income year equal to the amount (if any) by which:

                     (a)  the sum of all the *determined member components of all the *members of the AMIT of a particular character relating to assessable income, *exempt income or *non‑assessable non‑exempt income for the income year;

exceeds:

                     (b)  the *determined trust component of that character of the AMIT for the income year.

             (4)  Subsection (5) applies if a *determined member component is of the character of:

                     (a)  a *discount capital gain from a *CGT asset that is *taxable Australian property; or

                     (b)  a discount capital gain from a CGT asset that is not taxable Australian property.

             (5)  For the purposes of this section, treat the amount of the component as being double what it would be apart from this subsection.

276‑320  Meaning of trust component deficit

                   If the amount of the *trust component, worked out after applying sections 276‑305, 276‑310 and 276‑315 (and, if applicable, section 276‑325), falls short of nil:

                     (a)  despite those provisions, the *trust component of that character is nil; and

                     (b)  the shortfall is the *AMIT’s trust component deficit of that character for the income year.

276‑325  Trust component of character relating to assessable income—adjustment for cross‑character allocation amount, carry‑forward trust component deficit and FITO allocation amount

Section applies to trust component of assessable income character

             (1)  This section applies if the *trust component is of a character relating to assessable income.

Cross‑character allocation amount decreases trust component

             (2)  If the *AMIT has a *cross‑character allocation amount of that character for the income year, decrease the amount of the *trust component by that amount.

Note:          A cross‑character allocation amount of a character for the income year is allocated from a trust component deficit of another character for the income year in accordance with subsections 276‑330(2), (3) and (4).

Carry‑forward trust component deficit decreases trust component

             (3)  If the *AMIT has a *carry‑forward trust component deficit of that character for the income year, decrease the amount of the *trust component by the amount of that deficit.

Note:          A carry‑forward trust component deficit for the income year is worked out in respect of the previous income year under subsection 276‑330(5).

FITO allocation amount increases trust component with the character of foreign source income

             (4)  If:

                     (a)  the character of the *trust component is a character relating to *ordinary income, or *statutory income, from a source other than an *Australian source; and

                     (b)  the *AMIT has a *FITO allocation amount for the income year;

increase the amount of the trust component by that FITO allocation amount.

Note:          A FITO allocation amount for the income year is worked out in accordance with section 276‑335.

276‑330  Meaning of cross‑character allocation amount and carry‑forward trust component deficit

Section applies to trust component of assessable income character

             (1)  This section applies if the *trust component is of a character relating to assessable income.

Cross‑character allocation amount

             (2)  The trustee may, in accordance with subsection (3), allocate a *trust component deficit (if any) of that character for the income year against the *AMIT’s other trust components for that income year that are also of a character relating to assessable income.

             (3)  For the trustee to make an allocation under subsection (2) the trustee:

                     (a)  must allocate that *trust component deficit between those other *trust components on a reasonable basis; and

                     (b)  cannot allocate more to a trust component than the amount of that trust component.

             (4)  If the trustee allocates an amount under subsection (2) to a *trust component of a character for that income year, the amount allocated is a cross‑character allocation amount of that character for that income year.

Carry‑forward trust component deficit

             (5)  If there is an amount of that *trust component deficit remaining after allocating it in accordance with subsection (2), the remaining amount is the *AMIT’s carry‑forward trust component deficit of the character mentioned in subsection (1) for the next income year.

276‑335  Meaning of FITO allocation amount

             (1)  This section applies if:

                     (a)  the *AMIT has a *trust component of the character of *foreign income tax paid that counts towards a *tax offset under Division 770; and

                     (b)  the AMIT has a *trust component deficit for the income year of that character.

             (2)  The *AMIT has a FITO allocation amount for the income year equal to the sum of:

                     (a)  that *trust component deficit; and

                     (b)  the product of:

                              (i)  that trust component deficit; and

                             (ii)  the *corporate tax gross‑up rate.

276‑340  Trust component character relating to tax offset—taxation of trust component deficit

             (1)  This section applies if:

                     (a)  the *AMIT has a *trust component of a character relating to a *tax offset; and

                     (b)  the character of the trust component is not the character of *foreign income tax paid that counts towards a tax offset under Division 770; and

                     (c)  the AMIT has a *trust component deficit for the income year of that character.

Offset trust component deficit (other than FITO character) taxed

             (2)  The trustee of the *AMIT is liable to pay tax at the rate declared by the Parliament on the amount of the *trust component deficit.

Note:          The tax is imposed by the Income Tax (Attribution Managed Investment Trusts—Offsets) Act 2016 and the rate of the tax is set out in that Act.

Unders and overs

276‑345  Meaning of under and over of a character

             (1)  This section sets out how to work out the amount (if any) of an *AMIT’s *under or *over of a particular character for an income year (the base year) in a later income year (the discovery year).

             (2)  The time (the discovery time) at which this is worked out for the discovery year is just before the trustee works out the *determined trust component of that character for the discovery year.

Note:          This allows unders and overs to be included in the determined trust component for the discovery year: see section 276‑305.

             (3)  Compare the following amounts:

                     (a)  the *AMIT’s *trust component of that character for the base year, worked out on the basis of the trustee’s knowledge at the discovery time (the discovery year amount);

                     (b)  this amount (the base year running balance):

                              (i)  if the discovery year is the first income year after the base year—the AMIT’s *determined trust component of that character for the base year; or

                             (ii)  otherwise—the discovery year amount worked out under a previous operation of this section for the most recent income year before the discovery year.

A shortfall is an under

             (4)  If the base year running balance falls short of the discovery year amount, the amount of the shortfall is an under of that character, for the base year, that the *AMIT has in the discovery year.

An excess is an over

             (5)  If the base year running balance exceeds the discovery year amount, the amount of the excess is an over of that character, for the base year, that the *AMIT has in the discovery year.

276‑350  Limited discovery period for unders and overs

                   Despite section 276‑345, an *AMIT does not have an *under or an *over of a particular character for an income year (the base year) if:

                     (a)  assuming the Commissioner made an assessment of the *trust component of that character on the day on which the document stating the AMIT’s *determined trust component of that character for the base year was created; and

                     (b)  assuming the assessment had not been amended at the discovery time mentioned in subsection 276‑345(2) for the under or over;

section 170 of the Income Tax Assessment Act 1936 would prevent the assessment from being amended to take account of the under or over.

Note:          Section 170 of the Income Tax Assessment Act 1936 specifies the usual period within which assessments may be amended.

Subdivision 276‑GShortfall and excess taxation

Guide to Subdivision 276‑G

276‑400  What this Subdivision is about

The trustee of an AMIT is liable to pay income tax on certain amounts reflecting under‑attribution of income or over‑attribution of tax offsets.

Table of sections

Ensuring determined trust components are properly taxed

276‑405    Trustee taxed on shortfall in determined member component (character relating to assessable income)

276‑410    Trustee taxed on excess in determined member component (character relating to tax offset)

276‑415    Trustee taxed on amounts of determined trust component that are not reflected in determined member components

Ensuring unders and overs are properly taxed

276‑420    Trustee taxed on amounts of under of character relating to assessable income not properly carried forward

276‑425    Trustee taxed on amounts of over of character relating to tax offset not properly carried forward

Commissioner may remit tax under this Subdivision

276‑430    Commissioner may remit tax under this Subdivision

Ensuring determined trust components are properly taxed

276‑405  Trustee taxed on shortfall in determined member component (character relating to assessable income)

Income character shortfall

             (1)  An *AMIT has a shortfall under this subsection for an income year equal to the amount (if any) by which:

                     (a)  the *determined member component of a *member of the AMIT of a character relating to assessable income for the income year;

falls short of:

                     (b)  the *member component of the member of that character for the income year.

Liability to tax

             (2)  The trustee is liable to pay income tax at the rate declared by the Parliament on the amount that is the sum of each shortfall of the *AMIT under subsection (1) for the income year.

Note:          The rate is set out in subsection 12(11) of the Income Tax Rates Act 1986.

276‑410  Trustee taxed on excess in determined member component (character relating to tax offset)

             (1)  An *AMIT has an excess under this subsection for an income year equal to the amount (if any) by which:

                     (a)  the *determined member component of a *member of the AMIT of a character relating to a *tax offset for the income year;

exceeds:

                     (b)  the *member component of the member of that character for the income year.

Liability to tax

             (2)  The trustee is liable to pay tax at the rate declared by the Parliament on the amount that is the sum of each excess of the *AMIT under subsection (1) for the income year.

Note:          The tax is imposed by the Income Tax (Attribution Managed Investment Trusts—Offsets) Act 2016 and the rate of the tax is set out in that Act.

276‑415  Trustee taxed on amounts of determined trust component that are not reflected in determined member components

             (1)  An *AMIT has a shortfall under this subsection for an income year equal to the amount (if any) by which:

                     (a)  the sum of all the *determined member components of all the *members of the AMIT of a particular character relating to assessable income, *exempt income or *non‑assessable non‑exempt income for the income year;

falls short of:

                     (b)  the *determined trust component of that character of the AMIT for the income year.

Liability to tax

             (2)  The trustee is liable to pay income tax at the rate declared by the Parliament on the amount worked out as follows:

                     (a)  first, work out the sum of each shortfall of the *AMIT under subsection (1) for the income year;

                     (b)  next, work out the extent (if any) to which each of those shortfalls gives rise to a *rounding adjustment deficit (see subsection 276‑310(2));

                     (c)  next, subtract the result of paragraph (b) from the result of paragraph (a);

                     (d)  next, work out the extent (if any) to which the result of paragraph (c) is referable to one or more shortfalls under subsection 276‑405(1);

                     (e)  next, subtract the result of paragraph (d) from the result of paragraph (c).

Note:          The rate is set out in subsection 12(12) of the Income Tax Rates Act 1986.

Gross‑up for discount capital gain

             (3)  Subsection (4) applies if a *determined member component is of the character of:

                     (a)  a *discount capital gain from a *CGT asset that is *taxable Australian property; or

                     (b)  a discount capital gain from a CGT asset that is not taxable Australian property.

             (4)  For the purposes of this section, treat the amount of the component as being double what it would be apart from this subsection.

Ensuring unders and overs are properly taxed

276‑420  Trustee taxed on amounts of under of character relating to assessable income not properly carried forward

             (1)  An *AMIT for an income year has a shortfall under this subsection for the income year equal to the amount (if any) by which:

                     (a)  an *under of the AMIT of a character relating to assessable income in the income year for an earlier income year (the base year) (as worked out by the trustee on the basis of the trustee’s knowledge at the discovery time mentioned in subsection 276‑345(2));

falls short of:

                     (b)  what the under would have been if it had been worked out on the basis of what the trustee should have known at that time.

Liability to tax

             (2)  The trustee is liable to pay income tax at the rate declared by the Parliament on the amount that is the sum of each shortfall of the *AMIT under subsection (1) for the income year.

Note:          The rate is set out in subsection 12(13) of the Income Tax Rates Act 1986.

Adjustment for later unders relating to the same base year

             (3)  If there is a shortfall under subsection (1) for a particular character for an income year, for the purposes of applying paragraph 276‑345(3)(b) (base year running balance) to a later income year, increase the amount mentioned in subparagraph 276‑345(3)(b)(ii) (previous discovery year amount) for that character by the amount of the shortfall.

             (4)  Subsection (5) applies if:

                     (a)  there is a shortfall under subsection (1) for a particular character for an income year; and

                     (b)  the *AMIT has an *under of that character in a later income year for the base year mentioned in subsection (1); and

                     (c)  the amount mentioned in paragraph (1)(b) is reflected (in whole or in part) in the amount of the under.

             (5)  Reduce the shortfall by the extent to which the *under in the later income year reflects the amount mentioned in paragraph (1)(b).

276‑425  Trustee taxed on amounts of over of character relating to tax offset not properly carried forward

             (1)  An *AMIT for an income year has a shortfall under this subsection for the income year equal to the amount (if any) by which:

                     (a)  an *over of the AMIT of a character relating to a *tax offset in the income year relating to an earlier income year (the base year) (as worked out by the trustee on the basis of the trustee’s knowledge at the discovery time mentioned in subsection 276‑345(2));

falls short of:

                     (b)  what the over would have been if it had been worked out on the basis of what the trustee should have known at that time.

Liability to tax

             (2)  The trustee is liable to pay tax at the rate declared by the Parliament on the amount that is the sum of each shortfall of the *AMIT under subsection (1) for the income year.

Note:          The tax is imposed by the Income Tax (Attribution Managed Investment Trusts—Offsets) Act 2016 and the rate of the tax is set out in that Act.

Adjustment for later overs relating to the same base year

             (3)  If there is a shortfall under subsection (1) for a particular character for an income year, for the purposes of applying paragraph 276‑345(3)(b) (base year running balance) to a later income year, decrease the amount mentioned in subparagraph 276‑345(3)(b)(ii) (previous discovery year amount) for that character by the amount of the shortfall.

             (4)  Subsection (5) applies if:

                     (a)  there is a shortfall under subsection (1) of a particular character relating to a *tax offset for an income year; and

                     (b)  the *AMIT has an *over of that character in a later income year relating to the base year mentioned in subsection (1); and

                     (c)  the amount mentioned in paragraph (1)(b) is reflected (in whole or in part) in the amount of the over.

             (5)  Reduce the shortfall by the extent to which the *over in the later income year reflects the amount mentioned in paragraph (1)(b).

Commissioner may remit tax under this Subdivision

276‑430  Commissioner may remit tax under this Subdivision

                   The Commissioner may remit the whole or any part of income tax for which a liability arises under this Subdivision if the Commissioner is satisfied that doing so does not result in a detriment to the revenue.

Subdivision 276‑HAMMA statements

Guide to Subdivision 276‑H

276‑450  What this Subdivision is about

An AMIT for an income year must give each member of the AMIT in respect of the income year an AMIT member annual statement (or AMMA statement) for the income year.

Table of sections

Operative provisions

276‑455    Obligation to give an AMMA statement

276‑460    AMIT member annual statement (or AMMA statement)

Operative provisions

276‑455  Obligation to give an AMMA statement

             (1)  An *AMIT for an income year must give each *member of the AMIT in respect of the income year an *AMMA statement for the income year.

Note:          Section 286‑75 in Schedule 1 to the Taxation Administration Act 1953 provides an administrative penalty for breach of this subsection.

             (2)  The statement must be given no later than 3 months after the end of the income year.

             (3)  However, the *AMIT need not give an *AMMA statement under subsection (1) to a *member if:

                     (a)  all of the member’s *determined member components for the AMIT for the income year are nil; and

                     (b)  all of the member’s *membership interests in the AMIT have an *AMIT cost base net amount for the income year of nil.

             (4)  To avoid doubt, the *AMIT does not fail to comply with subsection (1) merely because:

                     (a)  the AMIT gives *AMMA statements for the income year to *members in accordance with subsection (1) by the time required under subsection (2); and

                     (b)  after that time, the AMIT gives those members further AMMA statements for the income year that replace the AMMA statements mentioned in paragraph (a).

276‑460  AMIT member annual statement (or AMMA statement)

             (1)  An AMIT member annual statement (or AMMA statement) is a statement made by an *AMIT for an income year in accordance with this section.

             (2)  The statement must:

                     (a)  include information that reflects the amount and character of each *member component of the *member for the income year; and

                     (b)  state what the trustee reasonably estimates to be the amount of the excess or shortfall mentioned in section 104‑107C (AMIT cost base net amount) for the income year in respect of the *CGT asset that is the member’s unit or interest in the *AMIT.

             (3)  The statement is not an AMMA statement if the *AMIT fails to give it to the *member to whom it is addressed within 4 years after the end of the income year.

Note:          The AMIT must give each member an AMMA statement for the income year no later than 3 months after the end of the income year (see section 276‑455).

Subdivision 276‑JDebt‑like trust instruments

Guide to Subdivision 276‑J

276‑500  What this Subdivision is about

A debt‑like trust instrument in an AMIT is treated as a debt interest in the AMIT. A distribution in relation to the instrument is treated as interest for the purposes of provisions relating to interest withholding tax, and may be treated as a deduction in working out the trust components of the AMIT.

Table of sections

Operative provisions

276‑505    Meaning of debt‑like trust instrument

276‑510    Debt‑like trust instruments treated as debt interests etc.

276‑515    Distribution on debt‑like trust instrument could be deductible in working out trust components

Operative provisions

276‑505  Meaning of debt‑like trust instrument

             (1)  An instrument that gives rise to an interest in a trust is a debt‑like trust instrument in relation to the trust if:

                     (a)  the amount of any distribution relating to the interest is fixed, at the time the interest is created, by reference to the amount subscribed for the interest; and

                     (b)  any distribution relating to the interest is made solely at the discretion of the trustee of the trust; and

                     (c)  rights to distributions of capital or profits arising from all interests in the trust that are in the same *class as the interest, rank above all such rights arising from other interests in the trust (other than those covered under subsection (2)) if:

                              (i)  the trust ceases to exist; or

                             (ii)  where the trust is a *managed investment scheme—the scheme is under administration or is being wound up; and

                     (d)  in a case where, in relation to a particular period, the trustee of the trust does not make a distribution relating to the interest—making a distribution of any of the following kinds, in relation to that period, is prohibited by the constituent documents of the trust:

                              (i)  a distribution relating to any membership interest in the trust;

                             (ii)  a distribution relating to a membership interest in another entity, if that interest is stapled together with a membership interest in the trust.

             (2)  This subsection covers an interest in the trust that:

                     (a)  is not a *membership interest in the trust; or

                     (b)  satisfies the requirements in paragraphs (1)(a) and (b).

276‑510  Debt‑like trust instruments treated as debt interests etc.

             (1)  For the purposes of this Act:

                     (a)  treat a *debt‑like trust instrument in relation to an *AMIT as a *debt interest in the AMIT; and

                     (b)  treat a distribution on a debt‑like trust instrument in relation to an AMIT as a cost incurred by the AMIT in relation to a debt interest issued by the AMIT.

             (2)  If a trust is an *AMIT for an income year (disregarding this subsection), paragraph (1)(a) applies for the purposes of:

                     (a)  determining whether the trust is a *managed investment trust in relation to the income year; and

                     (b)  determining whether the trust is an AMIT for the income year.

             (3)  For the purposes of Division 11A of Part III of the Income Tax Assessment Act 1936, if an entity is the holder of a *debt‑like trust instrument in an *AMIT, treat a distribution to the entity in accordance with the instrument as interest.

276‑515  Distribution on debt‑like trust instrument could be deductible in working out trust components

             (1)  If an entity is the holder of a *debt‑like trust instrument in relation to an *AMIT, for the purposes of sections 276‑265 and 276‑270, treat a distribution to the entity in accordance with the instrument as a *return that the AMIT pays or provides on a *debt interest.

             (2)  For the purposes of subsection (1), disregard the distribution to the extent (if any) that it is referable to any of the following:

                     (a)  *exempt income of the *AMIT;

                     (b)  *non‑assessable non‑exempt income of the AMIT.

Subdivision 276‑KCeasing to be an AMIT

Guide to Subdivision 276‑K

276‑800  What this Subdivision is about

If a trust ceases to be an AMIT, and discovers an under or over from an income year when it was an AMIT, the under or over will have taxation consequences for the trust in the discovery year.

Table of sections

Operative provisions

276‑805    Application of Subdivision to former AMIT

276‑810    Continue to work out trust components, unders, overs etc.

276‑815    Effect of increase

276‑820    Effect of decrease

Operative provisions

276‑805  Application of Subdivision to former AMIT

                   This Subdivision applies if:

                     (a)  a trust was an *AMIT for an income year; and

                     (b)  the trust is not an AMIT for a later income year (the discovery year).

276‑810  Continue to work out trust components, unders, overs etc.

             (1)  For the purposes of this section, assume that the trust is an *AMIT for the discovery year.

             (2)  If the trust has an *under or *over of a character in the discovery year for an earlier income year when the trust was an *AMIT, work out the extent to which the under or over:

                     (a)  increases the amount of the AMIT’s *trust component of that character for the discovery year; or

                     (b)  decreases the amount of the AMIT’s trust component of that character for the discovery year.

276‑815  Effect of increase

             (1)  This section applies if there is an increase as mentioned in paragraph 276‑810(2)(a).

             (2)  If the character mentioned in subsection 276‑810(2) relates to assessable income, treat the amount of the increase as assessable income of the trust for the discovery year.

             (3)  Subsection (4) applies if the character mentioned in subsection 276‑810(2) is the character of:

                     (a)  a *discount capital gain from a *CGT asset that is *taxable Australian property; or

                     (b)  a discount capital gain from a CGT asset that is not taxable Australian property.

             (4)  For the purposes of subsection (2), treat the amount of the increase as being double what it would be apart from this subsection.

             (5)  If that character relates to *exempt income, treat the amount of the increase as exempt income of the trust for the discovery year.

             (6)  If that character relates to *non‑assessable non‑exempt income, treat the amount of the increase as non‑assessable non‑exempt income of the trust for the discovery year.

             (7)  If that character relates to a *tax offset, treat the amount of the increase as a tax offset of the trust for the discovery year of a kind corresponding to that character (in addition to any other tax offsets of that kind that the trust may have for the discovery year).

276‑820  Effect of decrease

             (1)  This section applies if there is a decrease as mentioned in paragraph 276‑810(2)(b).

             (2)  If the character mentioned in subsection 276‑810(2) relates to assessable income:

                     (a)  in the case of a character of:

                              (i)  a *discount capital gain from a *CGT asset that is *taxable Australian property; or

                             (ii)  a discount capital gain from a CGT asset that is not taxable Australian property;

                            treat half the amount of the decrease as a *capital loss of the trust for the discovery year; or

                     (b)  in the case of a character of:

                              (i)  a *capital gain (other than a discount capital gain) from a CGT asset that is taxable Australian property; or

                             (ii)  a capital gain (other than a discount capital gain) from a CGT asset that is not taxable Australian property;

                            treat the amount of the decrease as a capital loss of the trust for the discovery year; or

                     (c)  in any other case—treat the amount of the decrease as a deduction of the trust for the discovery year.

             (3)  If that character relates to *exempt income, treat the amount of the decrease as reducing the exempt income of the trust for the discovery year.

             (4)  If that character relates to *non‑assessable non‑exempt income, treat the amount of the decrease as reducing the non‑assessable non‑exempt income of the trust for the discovery year.

             (5)  If that character relates to a *tax offset, treat the amount of the decrease as reducing the tax offset or offsets (the existing offset or offsets) of the trust for the discovery year of a kind corresponding to that character.

             (6)  If that character relates to a *tax offset and exceeds the total of the existing offset or offsets (before the reduction under subsection (5)):

                     (a)  unless paragraph (b) applies—the trustee is liable to pay tax at the rate declared by the Parliament on the excess; or

Note:       The tax is imposed by the Income Tax (Attribution Managed Investment Trusts—Offsets) Act 2016 and the rate of the tax is set out in that Act.

                     (b)  if that character is the character of *foreign income tax paid that counts towards a tax offset under Division 770—subsection (7) applies.

             (7)  Increase the trust’s assessable income for the discovery year by the sum of:

                     (a)  the excess mentioned in subsection (6); and

                     (b)  the product of:

                              (i)  that excess; and

                             (ii)  the *corporate tax gross‑up rate.

Treat the amount of that increase as assessable income from a source other than an *Australian source.

Part 3‑30Superannuation

Division 280Guide to the superannuation provisions

Table of sections

280‑1        Effect of this Division

280‑5        Overview

Contributions phase

280‑10      Contributions phase—deductibility

280‑15      Contributions phase—limits on superannuation tax concessions

Investment phase

280‑20      Investment phase

Benefits phase

280‑25      Benefits phase—different types of superannuation benefit

280‑30      Benefits phase—taxation varies with age of recipient and type of benefit

280‑35      Benefits phase—roll‑overs

The regulatory scheme outside this Act

280‑40      Other relevant legislative schemes

280‑1  Effect of this Division

             (1)  This Division is a *Guide.

             (2)  Tax concessions in this Part are intended to encourage Australians to save in order to make provision for their retirement, recognising that superannuation investments, and the income from them, are quarantined for retirement.

280‑5  Overview

             (1)  There are 3 phases in the tax treatment of superannuation, as follows:

                     (a)  the contributions phase;

                     (b)  the investment phase;

                     (c)  the benefits phase.

             (2)  In the contributions phase, contributions are made to a superannuation plan in respect of a member of the plan.

             (3)  In the investment phase, these contributions are invested by the superannuation provider.

             (4)  In the benefits phase, these contributions, plus earnings from investing them, are usually paid as benefits to the member when he or she retires after reaching preservation age. In the event of death, the benefits are usually paid to the member’s dependants.

             (5)  There is also a regulatory scheme outside this Act that is relevant to the taxation treatment of superannuation. For example, other Acts set out prudential and operating standards for superannuation providers.

Contributions phase

280‑10  Contributions phase—deductibility

Contributions that can be deducted

             (1)  Employers can usually deduct contributions they make in respect of their employees. Individuals can usually deduct contributions they make in respect of themselves to most complying superannuation funds.

Other contributions cannot be deducted

             (2)  Other contributions cannot be deducted. These include contributions made by others in respect of individuals (such as contributions by a spouse or family member, or Government co‑contributions).

280‑15  Contributions phase—limits on superannuation tax concessions

             (1)  There is a limit to contributions that can be made in respect of an individual in a year that receive favourable tax treatment.

             (2)  If concessional contributions exceed an indexed cap, the excess is included in the individual’s assessable income and gives rise to a tax offset. The individual can release the excess concessional contributions from his or her superannuation interests. Unused cap can be carried forward for 5 years.

             (3)  If non‑concessional contributions exceed an indexed cap, the individual can request the release of either:

                     (a)  nothing; or

                     (b)  an amount equal to the sum of that excess and 85% of the associated earnings on that excess;

from the individual’s superannuation interests. Whether or not such a request is made, an amount relating to those associated earnings may be included in the individual’s assessable income and may give rise to a tax offset.

             (4)  In the absence of such a request, the Commissioner may require the relevant superannuation fund to release the amount described in paragraph (3)(b).

Note:          This can be done under subsection 131‑15(2) in Schedule 1 to the Taxation Administration Act 1953.

             (5)  The individual is taxed:

                     (a)  on any shortfall between the amount released as described in subsection (3) or (4) and the excess referred to in subsection (3); or

                     (b)  on that excess, if the individual requested that nothing be released from the individual’s superannuation interests.

             (6)  The Commissioner may require the release of an amount equal to this tax liability from the individual’s superannuation interests.

Note:          This can be done under subsection 131‑15(3) in Schedule 1 to the Taxation Administration Act 1953.

Investment phase

280‑20  Investment phase

             (1)  Contributions that can be deducted are assessable income of the superannuation provider. Contributions that cannot be deducted are not assessable income of the superannuation provider. (There are some exceptions.)

             (2)  Earnings on the investment of amounts in a superannuation plan are assessable income of the superannuation provider.

             (3)  The superannuation provider’s taxable income is generally taxed at the concessional rate of 15%.

             (4)  However, superannuation providers pay no tax on earnings from the assets that support the payment of benefits in the form of income streams, once the income streams have commenced.

Benefits phase

280‑25  Benefits phase—different types of superannuation benefit

                   Superannuation benefits can be drawn down as lump sums, income streams (such as pensions or annuities), or combinations of both. Different tax treatment may apply depending on whether a lump sum or income stream is paid.

280‑30  Benefits phase—taxation varies with age of recipient and type of benefit

             (1)  The taxation of superannuation benefits depends primarily on the age of the member.

             (2)  If the member is aged 60 or over, superannuation benefits (both lump sums and income streams) are tax free if the benefits have already been subject to tax in the fund (that is, where the benefits comprise a taxed element). This covers the great majority of superannuation members.

             (3)  Where a superannuation benefit contains an amount that has not been subject to tax in the fund (an untaxed element), this element is subject to tax for those aged 60 or over, though at concessional rates. This is relevant generally to those people (for example, public servants), who are members of a superannuation fund established by the Australian Government or a state government.

             (4)  If the member is less than 60, superannuation benefits may receive concessional taxation treatment, though the treatment is less concessional than for those aged 60 and over.

             (5)  Superannuation benefits may also include a “tax free component”; this component of the benefit is always paid tax free.

             (6)  Additional tax concessions may apply when superannuation benefits are paid after a member’s death.

280‑35  Benefits phase—roll‑overs

                   A member can “roll over” their superannuation benefits from one complying superannuation plan to another, or between different interests in the same plan. This is usually done to keep the benefits invested in the superannuation system, or to convert a lump sum to a superannuation income stream. No tax is generally payable until the benefits are finally drawn down.

The regulatory scheme outside this Act

280‑40  Other relevant legislative schemes

             (1)  The Superannuation Industry (Supervision) Act 1993 and the Retirement Savings Accounts Act 1997 regulate the prudential and operating standards for superannuation providers. Concessional tax treatment is generally available only if providers comply with these standards.

             (2)  Other legislative schemes relevant to superannuation include the following:

                     (a)  the Superannuation Guarantee (Administration) Act 1992, which requires that employers provide a minimum level of superannuation contributions for each of their eligible employees;

                     (b)  the Superannuation (Government Co‑contribution for Low Income Earners) Act 2003, which provides for Government co‑contributions to low income earners’ superannuation;

                     (c)  the Small Superannuation Accounts Act 1995, which provides a facility to accept payments of superannuation guarantee shortfalls;

                     (d)  the Superannuation (Unclaimed Money and Lost Members) Act 1999, which provides for the payment of unclaimed superannuation money, and the maintenance of a register of lost members.

Division 285General concepts relating to superannuation

285‑5  Transfers of property

             (1)  Any of the following payments covered by this Part can be or include a transfer of property:

                     (a)  a contribution;

                     (b)  a *superannuation lump sum.

             (2)  The amount of the payment is or includes the *market value of the property.

             (3)  The *market value is reduced by the value of any consideration given for the transfer of the property.

Division 290Contributions to superannuation funds

Table of Subdivisions

             Guide to Division 290

290‑A   General rules

290‑B    Deduction of employer contributions and other employment‑connected contributions

290‑C    Deducting personal contributions

290‑D   Tax offsets for spouse contributions

Guide to Division 290

290‑1  What this Division is about

This Division sets out the rules for deductions and tax offsets for superannuation contributions.

Subdivision 290‑AGeneral rules

Table of sections

290‑5        Non‑application to roll‑over superannuation benefits etc.

290‑10      No deductions other than under this Division

290‑5  Non‑application to roll‑over superannuation benefits etc.

                   This Division does not apply to a contribution that is any of the following:

                     (a)  a *roll‑over superannuation benefit;

                     (b)  a *superannuation lump sum that is paid from a *foreign superannuation fund;

                     (c)  an amount transferred to a *complying superannuation fund or an *RSA from a scheme for the payment of benefits in the nature of superannuation upon retirement or death that:

                              (i)  is not, and never has been, an *Australian superannuation fund or a *foreign superannuation fund; and

                             (ii)  was not established in Australia; and

                            (iii)  is not centrally managed or controlled in Australia.

290‑10  No deductions other than under this Division

             (1)  You cannot deduct under this Act an amount you pay as a contribution to a *complying superannuation fund or *RSA, except as provided by this Division.

             (2)  You cannot deduct under this Act an amount you pay as a contribution to a *non‑complying superannuation fund, except as provided by this Division.

Note:          Under Subdivision 290‑B (Deduction of employer contributions and other employment‑connected contributions), you may be able to deduct contributions you make to a non‑complying fund that you believe to be a complying fund.

Subdivision 290‑BDeduction of employer contributions and other employment‑connected contributions

Table of sections

Deducting employer contributions

290‑60      Employer contributions deductible

290‑65      Application to employees etc.

Conditions for deducting an employer contribution

290‑70      Employment activity conditions

290‑75      Complying fund conditions

290‑80      Age related conditions

Other employment‑connected deductions

290‑85      Contributions for former employees etc.

290‑90      Controlling interest deductions

290‑95      Amounts offset against superannuation guarantee charge

Returned contributions

290‑100    Returned contributions assessable

Deducting employer contributions

290‑60  Employer contributions deductible

             (1)  You can deduct a contribution you make to a *superannuation fund, or an *RSA, for the purpose of providing *superannuation benefits for another person who is your employee when the contribution is made (regardless whether the benefits are payable to a *SIS dependant of the employee if the employee dies before or after becoming entitled to receive the benefits).

Note:          Other provisions of this Act and the Income Tax Assessment Act 1936 may reduce, increase or deny the deduction in certain circumstances. For example, see sections 85‑25 and 86‑75 of this Act.

             (2)  However, the conditions in sections 290‑70, 290‑75 and 290‑80 must also be satisfied for you to deduct the contribution.

             (3)  You can deduct the contribution only for the income year in which you made the contribution.

             (4)  You cannot deduct the contribution if it is an amount paid by you, as mentioned in regulations under the Family Law Act 1975, to a *regulated superannuation fund, or to an *RSA, to be held for the benefit of your *non‑member spouse in satisfaction of his or her entitlement in respect of the *superannuation interest concerned.

290‑65  Application to employees etc.

             (1)  At a time when an individual is an employee of an entity within the expanded meaning of employee given by section 12 of the Superannuation Guarantee (Administration) Act 1992, this Subdivision applies as if the individual were an employee of the entity.

             (2)  For the purposes of this Subdivision:

                     (a)  in relation to a contribution by a partnership in respect of an employee of the partnership—treat the employee as an employee of the partnership; and

                     (b)  in relation to a contribution by a partner in a partnership in respect of an employee of the partnership—treat the employee as an employee of the partner.

Conditions for deducting an employer contribution

290‑70  Employment activity conditions

                   To deduct the contribution, the employee must be:

                    (aa)  your employee (within the expanded meaning of employee given by section 12 of the Superannuation Guarantee (Administration) Act 1992); or

                     (a)  engaged in producing your assessable income; or

                     (b)  an Australian resident who is engaged in your business.

290‑75  Complying fund conditions

             (1)  If the contribution was made to a *superannuation fund, at least one of these conditions must be satisfied:</