Kelly O'Dwyer (Higgins, Liberal Party, Minister for Small Business) Share this | Hansard source

First, I would like to thank those members who have contributed so eloquently to this debate on the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Bill 2015, the Income Tax Rates Amendment (Managed Investment Trusts) Bill 2015, the Medicare Levy Amendment (Attribution Managed Investment Trusts) Bill 2015 and the Income Tax (Attribution Managed Investment Trusts—Offsets) Bill 2015. This package of bills creates a dedicated new tax system for eligible managed investment trusts that will remove longstanding uncertainty in the interaction between Australian tax and trust law. This amending legislation will improve the competitiveness of the managed funds industry by reducing complexity, increasing certainty and minimising compliance costs.

Australia's funds management industry is one of the largest and most sophisticated in the world and as at 30 June 2015 had $2.6 trillion in funds under management. Importantly, this package of bills modernises the tax law applying to eligible MITs. It replaces the general trust tax rules, which were not designed for the use of trusts as collective investment vehicles. The new tax system will apply tax at the investor level rather than the entity level. Members will be taxed as if they had derived that income directly.

Additional new rules contained in these bills will reduce compliance costs by $30 million per year for trustees and investors by better aligning the commercial and tax consequences of MIT activities. Trustees will be permitted to account for variances in income attributed to members in the income year in which it is discovered or reissue statements to its members for the income year to which the variance relates. Trustees can now also treat classes within multiclass MITs as separate trusts, expanding their capacity to offer additional investment options without having to incur the cost of establishing separate trusts to achieve the same outcome. The bills also contain measures to strengthen the integrity of the MIT regime.

This package of bills has been long awaited and is widely supported by the industry. This package of bills will benefit the millions of Australians who invest in MITs, either directly or indirectly, through their superannuation. It will also ensure that Australia's MIT industry remains efficient and competitive and is better placed to export its expertise and attract funds from overseas. I commend this package of bills to the House.

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