Contact: Louise Denver
Deloitte
Financial Services Communications
0414 889 857

Contact: Adele Watson
Deloitte
Taxation Services
0404 063 026

“It is pleasing to see that the Government has recognised the need to simplify the rules relating to investments in cash management trusts for corporates and trusts that form part of a tax consolidated group.” said Deloitte Tax partner Adele Watson.

“The Minister for Revenue, Assistant Treasurer Peter Dutton has in fact taken a commercial approach to this issue and treated it in the same way as an ordinary bank account.”

A requirement on forming a tax consolidated group is that the cost base of all assets, except monetary assets, are required to be reset.  Investments in cash management trusts were not considered to be monetary assets.

“The issue for the investor was that on entering tax consolidation the cost base of the investment in the cash management trust was reset and in some cases this could have given rise to capital gains tax on redemption of the investment.  This was clearly an unintended consequence and caused double taxation.”

“The announcement means investments in cash management trusts will not attract capital gains tax."

“Business will welcome this adjustment,” said Ms Watson.

“Particularly, as the announced change is back dated to 1 July 2002”.

NB: See our media releases and copies of the report on www.deloitte.com.au