Australia To Enhance Property Trust Tax Regime

by Mary Swire, Tax-News.com, Hong Kong

09 April 2007

Australian Minister for Revenue and Assistant Treasurer, Peter Dutton, has announced details of changes to the tax law to enhance the international competitiveness of Australian property trusts.

“Stapled groups, such as Australian listed property trusts are becoming increasingly dependent on the acquisition of overseas assets in a bid to increase their competitive position," Dutton said in a statement issued last week.

“To facilitate this, the government will be amending the taxation laws to allow these stapled entities to restructure with an interposed head trust without taxation consequences,” he added.

The government will amend the law to provide a capital gains tax (CGT) roll-over for investors in a stapled group where there has been an interposition of a unit trust between the investors in a stapled group and the stapled entities.

The government will also make a consequential amendment to Division 6C of the Income Tax Assessment Act 1936, to ensure the restructures do not trigger Division 6C, which would otherwise tax the whole income of the interposed trust as if it were a company.

“These proposals seek to improve the international competitiveness of stapled entities, such as Australian property trusts, and to facilitate their expansion into offshore markets," Dutton said.

The government intends to legislate the changes as soon as practicable following a consultation.

When legislated, the amendments will apply from the 2006-07 income year.

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