Investors in Australian unit trusts are fighting to reverse a tax ruling which could see their trusts pay an unexpected 48.5% income tax.
Wednesday, August 10th 2005, 7:20AM
by The Landlord
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.
