Proposed Modifications to Constitutions

Proposed Modifications to Constitutions

Platinum Investment Management Limited (the Responsible Entity) has today announced proposed modifications (Modifications) to the constitutions of each of the following funds:

Platinum International Fund ARSN 089 528 307

Platinum Unhedged Fund ARSN 123 939 471

Platinum Asia Fund ARSN 104 043 110

Platinum European Fund ARSN 089 528 594

Platinum Japan Fund ARSN 089 528 825

Platinum International Brands Fund ARSN 092 429 813

Platinum International Health Care Fund ARSN 107 023 530

Platinum International Technology Fund ARSN 092 429 555

Platinum Global Fund ARSN 600 630 537

 

(each a Fund, together the Funds), to enable each Fund to operate as an Attribution Managed Investment Trust (AMIT). A copy of the Modification for each Fund is available free of charge by contacting Investor Services on 1300 726 700 (Australia only), 02 9255 7544, 0800 700 726 (NZ only), Monday to Friday, 8.30am to 6.00pm or email invest@platinum.com.au.

Date of effect

The Responsible Entity currently expects to make an irrevocable election into the AMIT regime for each Fund with effect from 1 July 2017.

Reasons for Modifications

The AMIT regime is a new taxation regime that commenced on 1 July 2016 for qualifying managed investment trusts (MITs). Eligible MITs can make an irrevocable election into the AMIT regime.

The Responsible Entity intends to elect into the AMIT regime for each Fund because, based on the expected operation of the AMIT rules, it believes that the regime provides greater tax certainty and flexibility that is consistent with the best interests of unitholders.

Under the AMIT regime, in respect of a Fund:

  • taxable income will be allocated to unitholders using the concept of “attribution”, replacing the “present entitlement” model. For income tax purposes, the Fund will attribute assessable income, exempt income, non-assessable non-exempt income, and tax offsets to unitholders on a “fair and reasonable” basis, consistent with the modified constitution. The attributed taxation components will also retain their tax character in the hands of unitholders;
  • the Responsible Entity may allocate realised capital gains from the sale of the Fund’s investments in order to fund a large unitholder withdrawal, together with a proportion of any undistributed income to the date of redemption to the redeeming unitholder, in accordance with the constitution (this is instead of a pro-rata distribution of realised gains based on unitholdings); 
  • the Responsible Entity may be taxed on any taxable income of the Fund that the Responsible Entity fails to allocate to the unitholders, and may be liable for tax in respect of any tax offsets that have been over attributed to unitholders;
  • the Responsible Entity will need to comply with the AMIT rules and may be liable for administrative penalties for non-compliance, for example, for any understatements and overstatements of tax components caused by recklessness or intentional disregard of Australian tax law; and

Potentially giving rise to benefits such as:

  • the Fund will be deemed to be a fixed trust, which may be uncertain under the current rules. This status is important for tax matters such as trust loss recoupment;
  • the Responsible Entity has the ability to carry forward certain understatements and overstatements of taxable income and tax offsets, and deal with these as timing adjustments in the year in which they are discovered. This mitigates the need to re-issue unitholder statements for prior years;
  • upward cost-base adjustments of units are allowed if the amount distributed by the Fund is less than the taxable income attributed. This mitigates double taxation which may occur under the current rules, where no cost base increase is permitted with the result that a unitholder may therefore be taxed again when the cash is subsequently distributed; and
  • a choice is available to treat individual classes of multi-class trusts as separate AMITs.

For income years in which a Fund is an AMIT, Australian resident unitholders will be subject to tax on the taxable income of the Fund that is attributed to them, as advised in an AMIT Member Annual Statement (AMMA Statement). The AMMA Statement will also disclose cost base adjustments and must be given to unitholders no later than 3 months after 30 June each year.

Effect of Modifications

The Modifications in respect of a Fund would amend the Fund’s constitution to provide the Responsible Entity with the power to:

  • make an irrevocable election for the Fund to operate as an AMIT (including the ability to make a choice to treat each class of units as a separate AMIT where relevant);
  • recover from the Fund in relation to any income tax liability incurred as a result of the Fund being an AMIT;
  • do all things necessary to operate the Fund as an AMIT; and
  • insert other provisions considered by the Responsible Entity as being necessary or incidental to the Fund complying with the AMIT regime.

Proposed implementation of Modifications

The Responsible Entity will implement the Modifications in respect of a Fund unless it receives requests from unitholders of the Fund to call and arrange for a meeting of unitholders to consider and vote on a special resolution to implement the Modifications to the Fund’s constitution:

  • from unitholders with at least 5% of the votes that may be cast on the resolution; and
  • by the close of business on 22 May 2017.

If you are a unitholder in a Fund and would like to request that a meeting of unitholders be called for that Fund as described above, the request must be made in writing and may be sent to the Responsible Entity at Investor Services at invest@platinum.com.au or Platinum Asset Management, GPO Box 2724, Sydney NSW 2001.

In respect of a Fund, unless unitholders of the Fund with at least 5% of the votes that may be cast on the resolution request a unitholders' meeting by the close of business on 22 May 2017, the Responsible Entity will make the Modifications to the Fund’s constitution.

If you have any further questions, please contact Investor Services on 1300 726 700 (Australia only), 02 9255 7544, 0800 700 726 (NZ only), Monday to Friday, 8.30am to 6.00pm or email invest@platinum.com.au.