The Minister of Finance has corrected an anomaly in the tax treatment of listed property loan stock companies and listed property unit trusts in this Budget.
However, the move was reflected in prices several months ago and is not expected to have a substantial effect on property unit trust prices, Craig Ewin, MD: property management at RMBT Property Services, said.
Property loan stock companies distribute interest, but property unit trusts distribute both dividends and interest - dividends originate from rental income received by fixed property companies and interest earned on cash balances.
Where individuals were concerned, the payment from property unit trusts was treated as a whole as interest. For retirement funds there was a loophole in the legislation exempting dividends from fixed property companies from the 17 percent tax. These dividends represent net rentals, and an amendment to the legislation has been anticipated for some time.