Managed Funds

The Treasurer announced an intention to make a technical amendment to the capital gains tax (CGT) provisions confirming gains made by managed funds on the disposal of capital (non trading) assets will continue to be assessed under the CGT provisions.  This announcement is in response to the Australian Taxation Office's interpretation that these gains should be treated as ordinary income of the fund, thus potentially denying investors in the fund the opportunity to claim the 50% general discount on those gains.

The amendment applies to Australian managed investment trusts (other than those which are taxed as companies).  To ensure all gains made by these trusts are taxed as capital gains, the trustee will make an irrevocable election to apply the CGT provisions to all asset disposals.

The change will take effect from the 2008/09 income year.