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Inland Revenue

Tax Policy

Foreign investment vehicle definition in section HM 3

No clause



Section HM 3(2) currently states that:

A trust that is, for Australian tax purposes, a managed investment trust under the Taxation Administration Act 1953 (Australia) is a foreign PIE equivalent if it meets the requirement in subsection (1)(a).

We understand that the definition of a “Managed Investment Trust” is to shortly be moved from the Taxation Administration Act 1953 (Australia) to the Income Tax Assessment Act 2007 (Australia).  Once enacted, this will potentially make the above provision inoperative.

To “future proof” section HM 3(2), we recommend that the words “or successor Act” is added after Taxation Administration Act 1953 (Australia).


The approach suggested in the submission is not consistent with the Parliamentary Counsel Office’s drafting practice.  This is why the Income Tax Act 2007 does not include the phrase “or successor Act” in any existing provision.  Furthermore, as the Taxation Administration Act 1953 is not being repealed, it is not clear that “or successor Act” would cover moving a provision from one existing Act to another.  A suitable alternative would be to add “or a corresponding provision in another Act”.

However, the approach typically taken in updating cross-references in tax legislation is to wait for the underlying enactment to be amended then update the cross-reference accordingly, rather than insert a general “or successor” terminology.

Officials have reviewed the proposed definition of Managed Investment Trust in Subdivision 275-A of the exposure draft of the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Bill 2015.  This definition is not exactly the same as that in the Taxation Administration Act 1953.  Officials, however, consider it continues to be consistent with the policy intent of the foreign PIE equivalent requirements.

Until Australia enacts changes to this definition no certainty can be obtained in the final definition, or even whether any changes will occur.  Officials consider the appropriate cross-reference can be more clearly drafted once any Australian amendments have been enacted.  This should instead be added as a remedial item to the tax policy work programme.


That the submission be declined.