The Government has released the Tax Laws Amendment (New Tax System for Managed Investment Trusts) Bill 2015 which, if enacted, will mean that, from 1 July 2016, the fact that self managed superannuation fund(s) (SMSFs) hold more than 20% of the units in a unit trust will not cause the unit trust to be a public trading trust.

The public trading trust rules result in a unit trust being treated as a company in certain ways (for example, it is taxed at the corporate rate and its distributions can be franked). These changes are to apply to existing unit trusts (that are public trading trusts) as well as unit trusts set up after 1 July 2016. As a result existing unit trusts that are public trading trusts merely because SMSFs hold more than 20% of the units will cease to be public trading trusts from 1 July 2016.

As part of the changes certain transitional rules apply. This includes that existing franking credits must be used by the unit trust before 1 July 2018. 

To find out more, please contact:

Phil Broderick
Principal
Sladen Legal
+61 3 9611 0163  |  +61 419 512 801
pbroderick@sladen.com.au