The general tax objective of the new CCIV regime is ensuring that members can achieve attribution and flow-through of income from a CCIV through the AMIT regime. Therefore, the new CCIV rules incorporate provisions which deem each sub-fund of a CCIV to be a separate trust for tax purposes. This has the effect that:

  • the assets, liabilities and business referable to a sub-fund are treated as a separate unit trust (known as a ‘CCIV sub-fund trust’);
  • the CCIV is treated as the trustee of the CCIV sub-fund trust; and
  • members who hold shares in the CCIV that are referable to a sub-fund are treated as the beneficiaries of the CCIV sub-fund trust.

The assets, liabilities and business that are referable to a sub-fund will constitute the trust property which is held on trust for the benefit of the relevant beneficiaries of the CCIV sub-fund trust. The assets, liabilities and business of one sub-fund cannot be treated as belonging to any other sub-fund for tax purposes.

The CCIV will be treated for tax purposes as if it were a different tax entity in its capacity as trustee of each trust, with distinct responsibilities to meet the obligations of a trustee under the taxation law in respect of each CCIV sub-fund trust.

By deeming each sub-fund to be a separate unit trust, the new tax laws are intended to allow a sub-fund to pass threshold criteria of the AMIT regime (as amended for CCIVs) so that it and its members can be eligible for attribution flow-through taxation treatment. If the CCIV does not meet the amended AMIT eligibility criteria, the general trust taxation rules will apply. Notwithstanding its corporate structure, a CCIV will not be taxed as a company (unless the public trading trust rules under Division 6C apply to the CCIV). This has various implications for the taxation of the CCIV, including, for example, that the trust loss (and not the company loss) provisions should apply.

The deeming principle applies for the purposes of all taxation laws unless expressly excluded, including Australia’s international tax treaty network. The specific implications of this statutory fiction in its interactions with existing tax regimes will become apparent as the new rules are tested in practice.

The deeming principle has no application outside of the tax law, and does not act to create a trust for any other purposes