Managed Investment Trusts

Investments into Australia can be made through a variety of different structures, each of which have different consequences for tax purposes

Under Australian law, an investor could make an investment directly or through an investment vehicle including a company, a trust, a joint venture, a managed investment scheme or a partnership. The appropriateness of any one of these methods is dependent on the desired commercial requirements of a transaction and the taxation implications that result from each structure.

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A increasingly popular investment vehicle for foreign investors into Australia is the managed investment trust. The key benefit of a managed investment trust (“MIT”) is to access the concessional withholding tax regime. Under the MIT withholding tax regime, foreign investors who are a resident of a country with which Australia has an effective exchange of information on taxation matters are eligible for a reduced rate of withholding tax on fund payments from a MIT. The rate of withholding tax depends on the residence of the investor.

There are two critical eligibility requirements to access the managed investment trust regime:

  • Ownership requirement — the trust must satisfy a widely held ownership requirement and must also not be closely held under the applicable tests
  • Investment management requirement — a ‘substantial proportion’ of the ‘investment management activities’ must be carried out in Australia

One Investment Group members are considered the leading provider of trustee, custody and investment manager services to MITs in Australia. We are able to assist with both establishing and maintaining MITs.

One Investment Group’s Australian Financial Services Licensees are authorised to act as Trustee and investment manager to MITs. The role of the Trustee includes:

  • Responsibility for the compliance and the governance of the MIT
  • Ongoing satisfaction of legislative and regulatory requirements for the MIT
  • Overseeing the operations and administration of the MIT
  • Holding title to the MIT’s assets
  • Operating the MIT’s bank accounts

One Investment Group is a leading provider of trustee services in Australia with trusts with investments across various asset classes including property, infrastructure and equity. One Investment Group currently acts as Trustee of in excess of 300 trusts with in excess of $35bn of assets.

Further information about structuring investments into Australia can be found here and additional information about the requirements to ensure a trust is considered a managed investment trust in an income year can be found here.

Should you be seeking a Trustee and/or an investment manager to be appointed for the establishment of a managed investment trust, please contact us.