The MIT withholding tax regime for non-resident unit holders
A specific withholding tax regime, Subdivision 12-H of the Taxation Administration Act 1953, applies to fund payments made by a managed investment trust (MIT) to certain non-resident unit holders. From 1 July 2010, a managed investment trust will be required to withhold tax at a rate of 7.5% on a fund payment made to a non-resident unit holder (within 3 months after the end of the income year) if the non-resident’s address/place of payment is in a country specifically listed in the Act’s regulations. A flat withholding tax rate of 30% will apply to payments made by a managed investment trust to non-resident unit holders in other countries not listed in the Act’s regulations.
In order to qualify for this withholding tax regime, the trust making the payment needs to satisfy the criteria of a managed investment trust as set out in section 12-400 of the Taxation Administration Act 1953.
Does the MIT withholding tax regime apply?
Distributions for the Thakral Holding Group are paid by Thakral Holdings Trust which does not meet the criteria of a managed investment trust. Therefore, the distributions paid to non-resident unit holders do not qualify for the MIT withholding tax regime.
The MIT withholding tax regime does not allow a publicly listed trust such as Thakral Holdings Trust to elect to apply the withholding tax rules to distributions paid to non-resident unit holders.
Which foreign resident withholding taxes apply?
The existing withholding tax regime will continue to apply to distributions paid by Thakral Holdings Trust directly to non-resident unit holders. That is, a withholding tax rate of 30% will apply on the taxable component of distributions paid to non-resident companies, and a sliding scale of income tax rates starting at 29% on the taxable component of distributions paid to non resident individuals.
Interest income, dividends and royalties paid to non-residents are subject to different withholding tax rates to those mentioned above. To date, Thakral Holdings Trust has not paid distributions containing interest income, dividends, or royalties.
The non taxable components of distributions, including foreign source income, the Australian capital gains tax concessional component (applicable for non-resident individuals only) and the tax deferred component are not subject to withholding taxes.
Where to go for information
The Thakral website www.thakral.com.au, under Investor Centre will continue to be updated each year before the final distribution is paid (generally in August) with a breakdown of the taxable and non taxable components.
Non-resident unit holders will continue to receive their Thakral Annual Tax Statements and Distribution Statements detailing the above mentioned tax components of the distribution paid and the withholding taxes remitted.
Disclaimer of liability
While every effort is made to provide accurate and complete information,Thakral does not warrant or represent that the information in this guide is free from errors or omissions or is suitable for your intended use. Subject to any terms implied by law and which cannot be excluded, Thakral accepts no responsibility for any loss, damage, cost or expense (whether direct or indirect) incurred by you as a result of any error, omission or misrepresentation in information. You should consult your own tax advisor regarding the specific tax consequences relevant to you in respect of your investment in Thakral.