Australia: Tax on MIT distributions increased for EOI beneficial owners

According to the budget for 2012-13, handed down by the Treasurer on 8 May 2012, and effective

1 July 2012

the final withholding tax on Australian income distributed by Managed Investment Trusts (MITs) - other income/fund components subject to the Taxation Administration Act 1953 - will increase for beneficial owners resident in Exchange of Information (EOI) countries (see below) from 7.5% to 15%.

For fund payments made to beneficial owners in non-EOI countries, the rate of withholding tax will remain unchanged at 30%.

Impact on customers

There is no relief at source or reclaim of withholding tax available through Clearstream Banking¹ for residents of EOI countries. Distributions in Clearstream Banking will therefore be subject to the default tax rate of 30%.

Eligible beneficial owners may, however, be able to reclaim tax withheld on “other income" components directly via the Australian Tax Office (ATO).

Note: An example of an MIT fund distribution is given below.

EOI countries

The countries with Exchange of Information agreements currently in place are as follows:

Example of an MIT fund distribution

A typical distribution might consist of any or all of the following taxable components, each taxed at the rate indicated:

Income Tax Assessment Act 1936:

a. Not tax-exempt entities and not resident in a Double Taxation Treaty (DTT) country.
b. Upon request from the customer.
c. Clearstream Banking default rate for uncertified positions.
d. CFI: Conduit Foreign Income.
e. Whichever is lower.

Taxation Administration Act 1953:

a. Where both Discounted and Concession capital gain components have equal value, they are released as a summarised item taxed at 30%.
b. NTAP: Non-Taxable Australian Property.
c. Depending on confirmation from the MIT.
d. This component may be subject to the tax and certification requirements of the country that is the source of the income.

Further information

For further information, please contact the Clearstream Banking Tax Help Desk on:

or Clearstream Banking Customer Service or your Relationship Officer.

1. Clearstream Banking refers collectively to Clearstream Banking AG, registered office at 61, Mergenthalerallee, 65760 Eschborn, Germany and registered in the Register B of the Amtsgericht Frankfurt am Main, Germany under number HRB 7500 (CBF) and Clearstream Banking, société anonyme, registered office at 42, avenue John F. Kennedy, L-1855 Luxembourg, and registered with the Luxembourg Register of Commerce and Companies under number B-9248 (CBL).