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Australia Adds Detail To MIT Reforms

Tuesday, June 22, 2010

Australia’s Assistant Treasurer, Nick Sherry, has announced the detail of amendments to the definition of a managed investment trust (MIT) which widen the scope of trusts to benefit from taxation concessions available through the capital account and withholding tax arrangements.

The amended definition of a MIT will more closely align the definition used across different parts of the tax law and better matches widespread industry practice. It will ensure a range of trusts that were previously excluded will be eligible for the MIT withholding tax regime and capital account election.

The new definition includes: an extension of the widely held rules for trusts that are unregistered wholesale funds to all wholesale funds whether registered or not; the insertion of a new widely held rule for registered funds that allows a specified widely held entity to hold between 25% to 60% of the qualifying MIT; and an expansion in the widely held rules for registered trusts to recognize the nature of certain widely held members, including a reduction in the wholesale member requirements from 30 to 25 wholesale members for wholesale trusts.

There is also an expansion in the list of entities considered to be widely held to include foreign government pension plans, sovereign wealth funds and certain government agencies and widely held foreign equivalents of a managed investment scheme; and the inclusion of a regulation making power to provide for further expansion of the list of entities considered to be widely held if warranted.

An 18-month start up period during which a trust may be treated as an MIT prior to meeting the widely held requirements will be introduced, in order to facilitate the entry of new trusts into the MIT industry, together with improved transitional rules, including an extension of the transitional rules to seven years for trusts that were MITs prior to these amendments.

There is also a requirement that a substantial proportion of investment management activities undertaken in relation to the assets of the fund connected with Australia are to be carried out in Australia. No form of management rule will be applied to non-Australian assets and the substantial proportion rule will not apply in relation to the capital account election measure at all.

"These amendments will then better reflect general industry practices and will ensure that while continuing to attract and retain foreign capital, the Australian funds management industry continues to be supported and enhanced," Sherry said. "These changes build on a number of important existing reforms, and will further the government's commitment to securing Australia's place as a leading regional financial services centre."

"The government has already announced a new tax system for MITs, new rules to allow MITs to make an election to have certain investments assets treated on capital account and significant reductions in MIT withholding tax rates from 30% to 7.5% by 2010-11," he added. "The rules will ensure that appropriate integrity arrangements are in place to ensure that only genuinely widely held trusts with investment management activities substantially based in Australia in respect of their Australian assets can be recognized as MITs."

"To allow sufficient time for funds and investors to adapt to the new rules, we will also include very generous transitional arrangements," he concluded.

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The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




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