"The Government’s new withholding tax rate of 7.5% will encourage more investment into Australian property trusts which is welcomed, however this does create an investment bias towards property trusts away from fixed interest investment trusts or holding property through other structures,” Deloitte Tax Partner Adele Watson said.

“This is because the new 7.5% final withholding tax rate will not apply to Australian sourced interest and unfranked dividends paid, as they will continue to have withholding tax rates ranging from 10% to 30%,” Watson said. "

“In addition, as the 7.5% withholding tax rate will only apply to certain property trusts there will be a bias for non residents to invest in Australian property via these property trusts rather than trusts that do not qualify for the lower withholding tax rate or holding property directly,” she said.