How Is a Managed Investment Scheme Taxed?
A managed investment scheme or managed fund is a type of collective investment vehicle such as public unit trust. In such a trust, investors hand over money or other assets to a professional manager who manages the total funds to produce a return that is shared by investors. As members of the scheme, investors hold units in the trust that represent a proportional benefit as an entitlement to the trust assets. Managed investment schemes cover a variety of investments, including cash management trusts, property trusts and timeshare schemes. However, they do not encompass regulated superannuation funds, ADFs or term deposits. The commission considers that the property syndicate that is structured to comply with the managed investment scheme provisions of the Corporations Act 2001 (Cth) is taxable under the trust provisions of the income tax assessment legislation according to Taxation Determination TD 2005/28.
Managed investment schemes that are required to restructure to comply with the Managed Investments Act 1998 (Cth) giving income tax and capital gains tax relief from the consequences of the restructure. There are also special provisions in relation to corporate unit trusts. These entities, in relation to an income year qualify in this category as a public unit trust as part of an arrangement for the reorganisation of the company or company group. It may be that a business or other property of the company has been transferred to the entity and shareholders of the company involved in the reorganisation then received entitlements to take up units in the trust. A trust of this nature is a public unit trust under this purpose where any type of the units are listed or quotation on the stock exchange, the units are held by 50 or more persons, or any of the units are offered to the public. In this case, the managed investment scheme or corporate unit trust is taxed as a company. Obviously, this area of the law is extremely complicated and if you have any questions in relation to this part of the law you should seek advice from an appropriately qualified professional.