Managed investments 108-04090040

A managed investment is an indirect investment product that allows people to invest in a range of investment asset classes. Some of the features of a managed investment are:

• the investor's money is pooled with other investors' money in a fund
• money (or property) is paid or transferred to a body corporate or into a trust fund managed on the investor's behalf by a Fund Manager
• assets bought with invested money are in the body corporate/trust fund's name, not the investor's
• the investor has no control over how the money is invested
• the investor has a legally enforceable right to the income or profits derived from their money

Managed investments will be either unit based or account based:

• Unit based (or unitised) products are investments where customers own a certain number of units within the investment. Each unit is assigned a unit price. The unit price may vary depending on the market
• For example, if you have 2,000 units in option A and each unit is valued at $1.04, then your total investment would be $2,080
• Account based investments are where customers have invested money directly, often as a lump sum, rather than purchasing individual units

Managed investments will show each investment on the Managed Investment Summary (MIS) screen. Staff can find out if a product is unit based or account based by the Amt/Unit: field:

• Unit based products will have a ‘U’ followed by the number of units
• Account based products will have a dollar sign followed by the value of the investment

Managed investments are financial investments. They are subject to the deeming provisions. However, the deeming rules are not used to calculate income from managed investments owned by a private trust or private company.

If a loan is the source of the funds used to purchase the investment, this loan or liability reduces the asset value of the managed investment(s) used as security. Sometimes this is called a Margin Loan. See Loan or liability against assets for more information.

Customers should be advised that if they give details of any new managed investment(s) then their record will be reassessed along with all other existing managed investments that they may have on record. Unitised managed investments are automatically revalued each 6 months in March and September. Deeming will still apply to the gross value of the investment.

If there is a small change to asset values, determine whether the customer needs to notify.

The revaluation of private trust or company owned managed investments or shares occurs with any review of, or investment update, within the trust or company. The latest prices/values are automatically applied at the time of the review, to update and include within the attributable assets.

From December 2015, all Timeshare investments are a considered to be managed investment.

Managed investments owned by an entity do not have the deeming rules applied. The actual income received will be used to calculate the entity’s income. If a margin loan was used to purchase the investment, this is considered as a Loan or liability against assets used as security.

Private trust or company owned managed investments can only be assessed and coded by a Complex Assessment Officer (CAO). The entity has its own unique record where managed investments are coded.

For information about the treatment of investment funds held in trust, see Trusts.

The attribution principles apply and the issue should be referred to a CAO for a decision.

Most unitised managed investments coded on the system are automatically updated each 6 months, in March and September.

Data on unitised managed investments is provided by a contracted company or collected by Services Australia’s FINS section:

• on a monthly basis, and
• using prices from the last working day of each month

Data provided is usually available for assessment purposes by the middle of the following month.

A closed investment fund is generally closed to new investors either temporarily or permanently.

A terminated or wound up investment fund is no longer available for investment.