Investment trust companies - taxation of income
The measure
An investment trust company (ITC) which invests in interest bearing assets is currently taxable on the interest. New measures are being introduced to enable the ITC to elect to move the taxable person from being the ITC to the investor in the ITC. The effect is that the shareholders are taxed on the interest as though they owned the interest bearing asset themselves. The ITC would get a deduction for the interest it pays the investor, which should effectively cancel the ITC's tax liability.
Who is affected?
Investors in investment trust companies and investment trusts.
When
The measure will take effect for interest distributions made from 1 September 2009.
The measure will move the tax payment obligation from the ITC to the shareholder. This aligns the treatment of interest income in ITC's to similar income in unit trusts.
