• Federal Budget 2020-2021

Expanding List of Information Exchange Countries

The Government has announced an update to the list of information exchange countries. Tax residents in the listed countries access the reduced Managed Investment Trust (MIT) withholding tax rate of 15% rather than the default rate of 30% for certain fund payments made by Australian MITs to overseas investors.

The current MIT regime provides for the reduced withholding tax rate for 122 listed countries which have established a legal relationship with Australia, enabling them to share taxpayer information with the Australian revenue authorities. This update will add the Dominican Republic, Ecuador, El Salvador, Hong Kong, Jamaica, Kuwait, Morocco, North Macedonia and Serbia to the list, and will be effective from 1 January 2021. It will also remove Kenya from the list as it has not yet entered into an information sharing agreement with Australia.

BDO Comment

With the addition of nine countries to the information exchange country list, this measure aims to make the MIT regime and investment into Australia more attractive to new international investors. In particular, this measure will assist in attracting investors from the Asian region. Despite the recent political climate and unrest, it is likely to remain an important source of funds for new investment into Australia.

After last year’s additions, a further expansion to the list of information exchange countries continues to reinforce the Government’s commitment to international tax transparency through the use of concessional MIT withholding rates as an incentive for jurisdictions to sign information sharing agreements with Australia.