Cormann warning on MIT withholding tax deal
The Federal Opposition has taken both the Government and the Australian Greens to task for what it claims are legislative changes which will make withholding tax arrangements around managed investment trusts (MITs) "even worse".
The Opposition spokesman on financial services, Senator Mathias Cormann, said the push to increase the final withholding tax on MITs from 7.5 per cent to 15 per cent had already placed billions of dollars in investment in critical infrastructure at risk and increased Australia's sovereign risk profile.
"Now Labor and the Greens have made the tax grab more complex and more confusing for overseas investors by creating a two-tier withholding tax system with a 15 per cent tax rate for infrastructure investment and a 10 per cent rate for investment in limited types of new buildings," he said.
Cormann said the rushed deal between the Government and the Greens appeared limited only to future construction of buildings that met certain energy efficiency standards and appeared to exclude investment in critical infrastructure such as hospitals and definitely excluded investment in roads and ports from the lower tax tier.
The Opposition spokesman called for the deal on withholding tax to be subject to further scrutiny by a Senate committee.
"This deal should be properly scrutinised by a Senate committee and not rushed through the Parliament," he said.
The Property Council of Australia has described the withholding tax change as "the wrong decision, based on the wrong advice, implemented at the wrong time".
Property council chief executive, Peter Verwer said the move sent negative signals to investors who would now actively seek stronger after-tax returns in other countries.
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
