Manage your Investments
A managed investment is a professionally managed investment portfolio in safest countries you choose. They can include investments in property (both residential or commercial), in bank accounts fixed interest, in various business projects, cash, shares and more. There are a number of benefits of investing in a managed fund:
Easy to Overcome Economic Fluctuations
Easy to manage: Instead of making a number of small investments, you can hold just one investment, where you purchase ‘units’ in the managed fund that holds many shares and/or other investments.
Easy to diversify: Diversification means ‘not putting all your eggs in one basket’. With a managed fund, you can lower risk, by investing across asset classes (e.g. shares, property bank deposits, as well as within asset classes)
Easy to get started: You can start your Australian ElegantInvest fund with as little as $1,0000 with a regular investment plan.
Indians looking to invest in Australian real estate have various options. They could invest in Australia by purchasing real property directly or alternatively invest through an investment vehicle such as a trust or company. Australia has recently introduced a tax-efficient investment structure – a managed investment trust (MIT) – through which non-residents may invest into property in Australia.
An MIT is a widely held unit trust that is used to facilitate collective investment in Australia by both resident and non-resident investors. A trust is a contractual arrangement supported by a trust constitution between the investor and the trustee. The trustee is required to hold and invest assets on behalf of the investor record income and gains pay expenses deal with the income and capital of the trust as set out in the constitution of the trust.
An MIT is entitled to certain tax concessions in Australia that are beneficial to non-resident investors.
Investing through managed funds in Australia taxation of managed investment trusts and the new investment manager regime
Investment into Australia can be achieved through a variety of different structures, each of which will have a different consequence for tax purposes. Under Australian law, an investor could make an investment directly or through an investment vehicle such as a company, a trust, a joint venture, a managed investment scheme or other collective investment vehicle or a partnership. The appropriateness of any one of these methods is dependent on the desired commercial requirements of a transaction and the taxation implications that result from each structure.
Investment vehicle of choice – the MIT
Recently the investment vehicle of choice, both for foreign and domestic investors has tended to be a managed investment trust (MIT). Tax reforms introduced have increased the popularity of the MIT, particularly for non-residents investing in property. Foreign investors making such investments receive a concessional withholding tax rate of 15% (or 10% for eligible clean building MITs), rather than a withholding rate of 30%, for distributions of rental income and realised capital gains paid from an MIT to an investor that is domiciled in a country with which Australia has an exchange of information agreement.
Another advantage of making an investment through a MIT is that they may elect to hold certain assets, including shares, units and land, on capital account, ensuring that distributions arising from its disposal are taxed under Australia’s capital gains tax (CGT) regime. Under this regime, individuals and trusts are entitled to a 50% reduction, and superannuation funds are entitled to 33.33% reduction, on a taxable gain on the disposal of assets that have been held for more than 12 months.
Attraction of MITs for foreign investors
For non-resident investors, having the investment treated as a capital gain rather than a revenue gain, means that there are only limited instances in which Australia will tax the amount of the gain. Non-residents are only liable to CGT on disposals of real property (directly or indirectly) and of business assets of a permanent establishment located in Australia. Australia’s taxation of gains on revenue account is not so restricted and the application of any applicable double tax agreement is usually the determinant for whether a non-resident has a liability to Australian tax on these gains.
How does a managed fund qualify as a MIT?
- To qualify as an MIT a fund must meet several requirements, including:
- The trustee of the fund must be an Australian resident, or alternatively the central management and control of the fund must be in Australia.
- The fund must be a passive investment vehicle, it cannot be a trading trust.
- A substantial proportion of the investment management activities for the funds’ Australian assets must be carried on in Australia (this requirement only applies to the withholding tax concession)
- The fund must be a managed investment scheme. Under Australia’s Corporations Law a managed investment scheme is an arrangement where people pool funds for a common purpose to make a profit. The investment vehicle is usually a unit trust with an external company manager.
- The fund must be widely held in the case of a wholesale fund this means that the fund must have at least 25 members. Tracing through the funds members is allowed to calculate the number of members, and
- A foreign individual investor must not own more than 10% of the fund—in the case of a wholesale fund, 10 or fewer investors (other than eligible widely held investors) cannot own more than 75% or more of the fund.
The new Investment Manager Regime (IMR) and advantages for foreign investors
Australia recently introduced reforms as part of its new Investment Manager Regime (IMR) to address the previous uncertainty about the tax treatment of offshore transactions undertaken through Australia. This brings Australia into closer alignment with other jurisdictions with an IMR, including Hong Kong, Singapore, the United Kingdom and the United States.
Under the new IMR regime, a non-resident investor may now use an Australian independent resident investment advisory fund manager, broker or exchange agent, and all investments in foreign assets will be exempt from tax in Australia, and investment in Australian assets will be treated as if they had been made directly by the non-resident, disregarding the Australian intermediary for tax purposes.
This tax treatment also extends to include foreign residents that invest through one or more interposed trusts or partnerships. This measure now ensures that foreign funds, which have a permanent establishment in Australia solely for the reason of using an Australian intermediary, will not be taxed on profits made on foreign assets in Australia.
Australia and India treaty
Summary of the protocol signed between Australia and India on 16 December 2011.
About the treaty
On 16 December 2011, the governments of Australia and India signed a protocol amending the agreement between the two countries for the avoidance of double taxation and the prevention of fiscal evasion with respect of taxes on income, which was signed in 1991.
Date of effect
The protocol entered into force on 2 April 2013, when both countries completed their domestic arrangements.
The protocol is effective in regard to:
- For Australia – general definitions, permanent establishments and business profits for any year of income beginning on or after 1 July 2013
- For India – income derived in any fiscal year beginning on or after 1 April 2014
- Articles on non-discrimination and exchange of information from 2 April 2013
- Assistance in the collection of taxes from 18 July 2013.
- These are the main features of the updated arrangements.
- Cross-border services will be taxable in the country of source where those services are performed in that other country for more than 183 days in 12 months.
- Source-country taxation will apply to profits derived from natural resource exploration or exploitation activities – where those activities are undertaken for more than 90 days in 12 months.
- Source-country taxation will apply to profits derived from the operation of substantial equipment – where such operation continues for more than 183 days in 12 months.
- Only the profits attributable to an enterprise’s permanent establishment (branch) in Australia or India may be taxed in that country. This will remove the force-of-attraction rule in the existing treaty which allows for the taxation of indirect profits connected with a permanent establishment.
- A new non-discrimination article will protect nationals and businesses of one country from tax discrimination in the other country.
- The exchange-of-information article has been updated to the current international standard and will also allow the revenue authorities of Australia and India to exchange taxpayer information on a wider range of taxes.
- A new article regarding assistance in the collection of taxes will allow the revenue authorities of Australia and India to assist each other in the collection of outstanding tax debts.
- Withholding tax rates on dividends, interest and royalties, and withholding tax rates on managed investment trust distributions, remain unchanged and apply as set out in the original (1991) agreement.
Combined Investment Programme
If you plan to invest only 25 to 50 lakhs range at the start, we have an exclusive Combined Investment Programme, which will make you eligible for our Silver club membership. With this, you will get an Australian Bank account (or other concerned countries) to deposit your money. If you prefer, this account can be in your own name, and in that case, you can authorise ElegantInvest as your fund manager.
To increase your investment value, you can add up savings to the account. Once you reach a specified amount, we will upgrade your status to Golden club, making you enjoy more services and facilities. To be in Golden club means you will be yourself able to enter to the Austrian investment market. Otherwise, you can take advantage of our Combined Investment Programme. Know more about it below.
If you continue in Silver club, you can combine your money with other same status club members and this group can attain the eligibility to invest in any Australian entities like residential properties, homes or business assets. Similar to other club members, you will have a time period of agreement *(please check our rules and regulations) to withdraw your money. But you should inform the company before a specific period of time about the withdrawal.
1. Sign the application to invest your money with ElegantInvest.
2. The company and you will sign a mutual agreement for your deposit and you pay club membership fee. There you should decide that you or your nominee would deal with ElegantInvest and for other procedures.
3. Then ElegantInvest will start an account for you in an Australian Bank (or other concerned country) when you deposit your prime amount and you will get an Australian Bank account number, username and password to watch your account any time. Either you can choose that account in your own or your nominees’ name or authorise ElegantInvest as your Fund Manager. Whatever the case, you can always observe your deposits or account balance online at your fingertips.
4. If you authorise ElegantInvest to manage the funds, ElegantInvest will combine your funds or deposits with other Silver club members’ money only on your request and we will invest that fund into a residential property or other equities only on your approvals.
5. It makes you eligible to visit Australia (or other concerned country) in a period of time alternatively. You can stay in your residential property in your holiday visit (only if you choose your invest in that way). That is, you are one of the owners of that Australian (or other concerned country) holiday home and even though you can withdraw the money on prior conditions.* (*If another silver member waits to join your companionship or, the company has a number of other customers in queue to join your vacancy or, your co-members also agree with you to sell the property off)
6. The money will be safe there until you would take a decision on that. You can add a predecessor for this account or a part of this fund after your time or you can add any number of nominees to handle this money. But we will take a decision only on your or your main nominee’s final approval (That happens in your long time absence)
7. Your identity will be very confidential and never be disclosed in any circumstances; Thankfully, Australia supports confidentiality and privacy of investors in the country.
8. You can ask any more any subject of doubts in contact page by sending us a message in your own language (please mention your language)