Assistant Treasurer David Bradbury today announced the Government will amend the income tax law to ensure foreign pension funds can access the Managed Investment Trust (MIT) withholding tax regime.
This amendment will apply from the start of the withholding tax regime, 1 July 2008, to provide certainty for industry and investors.
"The amendment will ensure that the law better aligns with the original policy intent of the MIT withholding regime," said Mr Bradbury.
MIT fund payments are subject to a final withholding tax rate of 15 per cent where the fund payment is made to a resident from a country with an effective exchange of information agreement with Australia. Payments made to residents of non-exchange of information countries are subject to a final tax withholding rate of 30 per cent.
The Government will continue to consult with the industry to ensure that the MIT withholding tax regime operates as intended and in line with current practice, in a way that provides certainty and maintains the integrity of the regime.