Commonwealth: Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 (Cth)

Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 No. 53, 2016 Compilation No. 2 Compilation date: 1 April 2019 Includes amendments up to: Act No. 15, 2019 Registered: 1 April 2019 About this compilation This compilation This is a compilation of the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016 that shows the text of the law as amended and in force on 1 April 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 Self‑repealing provisions If a provision of the compiled law has been repealed in accordance with a provision of the law, details are included in the endnotes.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 1 Short title 2 Commencement 3 Schedules Schedule 1—Attribution managed investment trusts Income Tax Assessment Act 1997 Taxation Administration Act 1953 Schedule 2—Annual cost base adjustment for member's unit or interest in AMIT Income Tax Assessment Act 1997 Schedule 3—Withholding MITs and fund payments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Taxation Administration Act 1953 Schedule 4—Managed investment trusts Income Tax Assessment Act 1997 Taxation Administration Act 1953 Schedule 5—20% tracing rule and repeal of Division 6B Part 1—20% tracing rule Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Part 2—Repeal of Division 6B Income Tax Assessment Act 1936 Part 3—Amendments consequential on the repeal of Division 6B Development Allowance Authority Act 1992 Income Tax Act 1986 Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Income Tax Rates Act 1986 International Tax Agreements Act 1953 Taxation Administration Act 1953 Part 4—Transitional Schedule 6—Consequential amendments Income Tax Assessment Act 1936 Income Tax Assessment Act 1997 Taxation Administration Act 1953 Tax Laws Amendment (2010 Measures No. 3) Act 2010 Schedule 7—Widely‑held requirements Taxation Administration Act 1953 Schedule 8—Application and transitional provisions etc. Income Tax (Transitional Provisions) Act 1997 Tax Laws Amendment (2011 Measures No. 5) Act 2011 Schedule 9—Definitions Income Tax Assessment Act 1997 Endnotes Endnote 1—About the endnotes Endnote 2—Abbreviation key Endnote 3—Legislation history Endnote 4—Amendment history An Act to amend the law relating to taxation, and for related purposes 1 Short title This Act may be cited as the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Act 2016. 2 Commencement (1) Each provision of this Act specified in column 1 of the table commences, or is taken to have commenced, in accordance with column 2 of the table. Any other statement in column 2 has effect according to its terms. Commencement information Column 1 Column 2 Column 3 Provisions Commencement Date/Details 1. Sections 1 to 3 and anything in this Act not elsewhere covered by this table The day this Act receives the Royal Assent. 5 May 2016 2. Schedules 1 to 6 The latest of the following days: 5 May 2016 (a) the day this Act receives the Royal Assent; (b) the day the Income Tax (Attribution Managed Investment Trusts—Offsets) Act 2016 receives the Royal Assent; (c) the day the Income Tax Rates Amendment (Managed Investment Trusts) Act 2016 receives the Royal Assent; (d) the day the Medicare Levy Amendment (Attribution Managed Investment Trusts) Act 2016 receives the Royal Assent. However, the provisions do not commence at all if any of the events mentioned in paragraphs (b), (c) and (d) does not occur. 3. Schedule 7 1 July 2014. 1 July 2014 4. Schedules 8 and 9 The latest of the following days: 5 May 2016 (a) the day this Act receives the Royal Assent; (b) the day the Income Tax (Attribution Managed Investment Trusts—Offsets) Act 2016 receives the Royal Assent; (c) the day the Income Tax Rates Amendment (Managed Investment Trusts) Act 2016 receives the Royal Assent; (d) the day the Medicare Levy Amendment (Attribution Managed Investment Trusts) Act 2016 receives the Royal Assent. However, the provisions do not commence at all if any of the events mentioned in paragraphs (b), (c) and (d) does not occur. Note: This table relates only to the provisions of this Act as originally enacted. It will not be amended to deal with any later amendments of this Act. (2) Any information in column 3 of the table is not part of this Act. Information may be inserted in this column, or information in it may be edited, in any published version of this Act. 3 Schedules Legislation that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms. Schedule 1—Attribution managed investment trusts Income Tax Assessment Act 1997 1 At the end of Part 3‑25 Add: Division 276—Australian 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‑A—What 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‑B—Member'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‑C—Taxation 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 members—taxation 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‑D—Member 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‑E—Trust 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‑F—Unders 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‑G—Shortfall 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‑H—AMMA 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‑J—Debt‑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