by Rob Hosking
ING New Zealand this week sent out a note to its advisers saying the industry is fighting the “interpretive” ruling from the Australian Tax Office – but, in the meantime, they have to warn investors in its ING Diversified Yield Fund that a tax bill might be on the way.
“The ruling seems to run against the intention of the law and it certainly runs counter to previous interpretations,” says’ ING’s Steven Giannoulis.
The Australian unit trust industry is now lobbying the Australian authorities for either a reversal of the ruling or a law change.
“The industry now has a number of tax lawyers and fund managers and industry bodies hassling them about this.”
The most likely outcome is a reversal of the ruling, says Giannoulis.
Put simply, the effect of the ruling is that if the trust does not distribute the income derived by the trust, the trust will be taxed on that income.
If the ATO ruling holds, ING has warned investors that it will have an impact on the return the fund makes.
“This would be either:
The ruling is nothing to do with the decision to restructure the Diversified Yield Fund through the Cook Islands says Giannoulis.
“We would have been affected by this even if we hadn’t moved to the Cooks,” Giannoulis says.
Rob Hosking is a Wellington-based freelance writer specialising in political, economic and IT related issues.
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