Govt aligns law with MIT withholding regime

The Government will amend the income tax law to allow foreign pension funds to access the managed investment trust (MIT) withholding tax regime.

The amendment will be backdated to 1 July 2008 to provide certainty for industry and investors, according to assistant Treasurer David Bradbury.

"The amendment will ensure that the law better aligns with the original policy intent of the MIT withholding regime," he said.

MIT fund payments to residents of countries with effective exchange-of-information agreements with Australia are subject to a final withholding tax rate of 15 per cent. Payments made to residents of non-exchange-of-information countries are subject to a 30 per cent final withholding tax rate.

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"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," it said.