AMITs – did you miss the bus to go in from 1 July 2016?

The ATO has granted a four month extension for deeds to be amended

The Attribution Managed Investment Tax (AMIT) regime is now law. It provides many improved tax outcomes and certainty for investors and trustees/REs of investment funds. See our earlier updates – New AMIT Rules and ASIC announce Class Order relief for AMIT regime.

One of the key criteria for being an AMIT is having a trust deed or constitution that has ‘clearly defined rights’ in respect of the capital and income of the fund. All deeds need to be assessed to confirm that they meet this criteria and many will require amendment to accommodate this requirement.

The requirement needs to be met ‘at all times’ when the trust is in existence in the income year. Practically, if a trustee/RE wants to enter the regime from 1 July 2016, this means that the deed must be compliant before 1 July 2016.

Strictly speaking, if the deed needs to be amended to meet this requirement and the amendment has not already been made, then the fund cannot go into the AMIT regime from 1 July 2016.

However, the ATO has issued Practical Compliance Guideline 2016/9¹, in which the ATO has confirmed that it will administer the AMIT regime such that, provided the amendments are made no later than 31 October 2016 and, for trust law purposes, the amendments are effective from 1 July 2016, then the rights will be taken to have been in existence ‘at all times’ from 1 July 2016.

In short, trustees/REs have a further four months to get their deeds in order so that they can apply the AMIT rules from 1 July 2016. The trustee/RE will also need to assess what, if any, other amendments to the deed are required in order to facilitate the fund’s entry into the AMIT regime.

¹Practical Compliance Guidelines (PCGs) set out the ATO’s position on how it will administer certain tax laws.  A PCG can be relied on by taxpayers who apply it in ‘good faith’.