Commonwealth Numbered Regulations - Explanatory Statements

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Select Legislative Instrument 2008 No. 141


Issued by authority of the Assistant Treasurer



Income Tax Assessment Act 1936


Income Tax Amendment Regulations 2008 (No. 1)


Section 266 of the Income Tax Assessment Act 1936 (the Act) provides, in part, that the Governor-General may make regulations, not inconsistent with the Act or the Income Tax Assessment Act 1997 (ITAA 1997), prescribing all matters which by the Act or the ITAA 1997 are required or permitted to be prescribed, or which are necessary or convenient to be prescribed for giving effect to the Act or the ITAA 1997.


Tax Laws Amendment (Election Commitments No. 1) Bill 2008 replaced the previous 30 per cent withholding regime applying to certain distributions from Australian managed investment trusts to foreign residents with a new withholding regime. The rate of withholding under the new regime depends on the place of payment, address or residency of the foreign investor.


The new withholding regime is expected to enhance the competitiveness of the Australian managed funds industry and its ability to attract foreign investment.


The purpose of the Regulations is to specify the reporting obligations of Australian managed investment trusts, custodians and other entities in relation to amounts withheld from payments to foreign residents under the new withholding regime.


Regulation 56 of the Income Tax Regulations 1936 (the Principal Regulations) currently requires investment bodies to provide the Australian Taxation Office (ATO) with an Annual Investment Income Report (AIIR) containing, among other information, details of investment income paid to investors and any tax withheld from these payments. This information facilitates data matching and assists the ATO’s compliance initiatives.


The Regulations inserted new subparagraph 56(4)(h)(iv) into the Principal Regulations, to require managed investment trusts, custodians and other entities that are investment bodies for AIIR purposes to include, in their AIIRs, information about amounts withheld under Subdivision 12-H of Schedule 1 in the Taxation Administration Act 1953 from payments to foreign residents. Subdivision 12-H requires managed investment trusts, custodians and other entities to withhold amounts from certain payments of their Australian sourced net income (other than dividends, interest and royalties) if the payments are made to an entity whose address, or place for payment, is outside Australia.


A Regulation Impact Statement was not required. Compliance costs were assessed as low.


Consultation was not undertaken in the development of the Regulations, due to their minor and technical nature.


The Regulations commenced on the commencement of the Tax Laws Amendment (Election Commitments No. 1) Act 2008.




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