Yesterday, the Government released draft legislation titled “Removing tax loopholes”, sjm.ministers.treasury.gov.au/media-release/078-2018, that include measures that address the tax leakage of foreign investment into residential and rural property.
The previous draft legislation released by the Government on 14th September 2017 had proposed that Managed Investment Trusts (“MITs”) be prohibited from investing in residential properties if they were not considered for affordable housing purposes. As the DomaCom Fund is structured as an MIT, this cast significant concerns over the viability of the DomaCom business model for the past 10 months.
We are pleased that the revised legislation has removed this prohibition and instead has addressed the potential tax leakage by foreign investment into residential properties by adjusting the withholding tax regime and ensuring that Foreign Investors pay their fair share of tax. DomaCom can now proceed with its business model of allowing investors to fractionally invest in residential properties across Australia.
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