The Finance Minister announced on 1 February 2008 that the government will halve the withholding tax rate applicable to certain payments to non-residents from Australian managed investment funds. The reduced rate of 15% is expected to apply from 1 July 2008.

At present, certain distributions to non-residents from Australian "managed investment trusts" and intermediaries are subject to a flat withholding tax at the rate of 30% regardless of the identity of the recipient. This is in contrast to withholding tax imposed on payments to non-residents from other types of trusts, the rate of which generally depends on the type of the recipient (e.g. 30% for companies, Australian marginal rate for individuals and 45% for trustees).

A "managed investment trust" is, briefly, an Australian resident widely-held trust licensed to carry on an investment management business in Australia.

In either case, the withholding tax applies to payments of income which would be subject to tax in Australia, such as Australian-sourced income, etc. The non-resident recipient may then choose to be taxed on the assessment basis and have the excess Australian withholding tax, if any, refunded.