Australia’s Attribution Managed Investment Trust (AMIT) and Managed Investment Trust (MIT) frameworks are built around tax transparency, investor certainty, and efficient income attribution. They work—mostly. But as the financial landscape changes, tokenised assets sit in a grey area, leaving compliance gaps and unnecessary friction.
Rather than treating tokenisation as a challenge, policymakers should see it for what it is: a powerful tool to improve compliance, strengthen tax integrity, and reduce avoidance and evasion. It’s a no-brainer. AMITs and MITs are already structured around clear attribution, ownership, and reporting, and tokenisation takes that a step further by automating transparency.
The fix? Integrating tokenised assets into AMIT and MIT provisions, making sure the tax system follows the three core principles that actually matter:
- Technical correctness – Does the tax law apply correctly?
- Organisational effectiveness – Can it be enforced fairly and efficiently?
- Implementability – Is it practical to roll out?
Technical Correctness: Tokenisation Already Fits the Tax Framework
Tax law is supposed to reflect economic reality. The whole point of AMITs and MITs is to track unit ownership and attribute tax obligations accordingly. Tokenisation doesn’t break that—it enhances it.
1. Tokenised Units Are Property—No Ambiguity
Units in a trust are already considered property under Australian law. Recent case law, such as Re Blockchain Tech Pty Ltd [2024] VSC 690, has confirmed that digital assets meet the legal tests for property, the same ones set out in National Provincial Bank Ltd v Ainsworth [1965] AC 1175:
- Definable – Tokenised trust units are specific assets.
- Identifiable by third parties – Blockchain makes ownership clear.
- Transferable – They can be bought and sold without confusion.
- Stable – Transactions are recorded permanently.
No loopholes. No grey areas. If the law already sees digital assets as property, tokenised AMIT and MIT units should be no different.
2. Automated Income Attribution Strengthens Tax Compliance
The AMIT regime requires precise income attribution to the right investors, at the right time. Tokenisation locks that in:
- Smart contracts automate distributions, reducing the chance of misallocations.
- Immutable records prevent backdating or tampering, ensuring taxable events are logged in real time.
- Transfers are recorded instantly, removing ambiguity over who owes tax at any given moment.
That’s more technically correct than traditional models, where paper-based or even digital unit registers still leave room for human error, manipulation, or misreporting.
3. Tokenisation Closes Tax Avoidance Loopholes
The Venture Capital Act 2002 (Cth) and the Income Tax Assessment Act 1997 (Cth) restrict VCLPs to investing in traditional shares, excluding tokenized securities even when they function identically to equity.
Historically, policy has evolved alongside financial markets to support innovation. For example:
3.1 Debt & Equity Classification (Division 974, ITAA 1997) – Ensuring Technical Correctness:
- This reform classified financial instruments based on economic function rather than legal form.
- Application to Tokenized Securities: Security tokens should be classified functionally, qualifying as equity if they grant governance, dividend, or residual claim rights, like traditional shares.
3.2 Taxation of Financial Arrangements (TOFA) Regime (Division 230, ITAA 1997) – Enhancing Implementability:
- TOFA introduced mark-to-market taxation for complex financial instruments, aligning tax treatment with economic reality.
- Application to Tokenized Assets: Tokenized venture capital investments should be taxed based on actual market performance, avoiding rigid classifications that don’t reflect financial reality.
Organisational Effectiveness: Automating Compliance and Reducing Admin Overhead
A tax framework isn’t just about technical accuracy—it has to work in practice. Right now, trust compliance is a labour-intensive, document-heavy process. Tokenisation cuts through that.
1. Real-Time Compliance and Reporting
Tokenised units mean:
- Automated tax withholding and attribution, ensuring compliance from day one.
- Instant auditing capabilities, reducing ATO enforcement costs.
- Live dashboards for regulators, making oversight easier without extra red tape.
Forget waiting for annual reconciliations—compliance happens in real time.
2. Fraud Prevention Without Extra Surveillance
Tokenisation provides permanent, tamper-proof transaction records, meaning:
- ATO investigations become faster and cheaper—no need to chase missing records.
- Funds can immediately identify unauthorised transfers or suspicious activity.
- Regulators get full visibility, without increasing compliance costs for funds.
Right now, compliance teams have to manually track and verify income attribution. Tokenisation removes human intervention from the process, reducing risk and cost.
3. Integration with Digital Identity (Digital ID) Systems
The future of compliance isn’t just better record-keeping—it’s better verification. Tokenised AMIT/MIT units can be tied to Digital ID systems, ensuring:
- Only verified investors can hold or transfer units.
- Know Your Customer (KYC) requirements are met automatically.
- Regulators can track ownership across multiple funds without extra admin.
This is a big leap forward. Fraud detection, AML checks, and investor verification all get stronger, not weaker with tokenisation.
Implementability: Minimal Disruption, Maximum Impact
No policy shift matters if it’s too hard to roll out. The good news? Tokenisation doesn’t need a full rewrite of the tax code.
1. Tokenised Units Are Already Functionally Equivalent to Traditional Units
- The trust structure doesn’t change—only the method of recording ownership does.
- Attribution rules remain the same—but automation makes them more accurate.
- The reporting framework stays intact—but regulators get real-time insights instead of waiting for annual filings.
This isn’t about reinventing AMITs and MITs. It’s about bringing them into the 21st century.
2. Safe Harbour Provisions for Gradual Adoption
Rather than forcing an immediate shift, the government could:
- Allow AMITs/MITs to voluntarily adopt distributed ledger technology (DLT) for unit tracking.
- Develop a reporting framework that integrates tokenised transactions with ATO systems.
- Introduce transitional rules to test real-world implementation before making it mandatory.
This gives the industry time to adapt, ensuring no disruption to investors or compliance teams.
3. Future-Proofing Against Market Evolution
The reality is, traditional fund structures are already shifting toward tokenisation. If the government doesn’t lead this, the market will do it anyway—and compliance gaps will grow.
- Major institutions are already trialling tokenised funds in global markets.
- Regulated digital asset investment structures are emerging in jurisdictions like Singapore and Switzerland.
- Ignoring tokenisation risks Australia falling behind in financial innovation.
The pragmatic move isn’t to fight tokenisation—it’s to integrate it sensibly and securely.
Conclusion: Tokenisation Strengthens, Not Weakens, the AMIT/MIT Model
The AMIT and MIT structures were designed to increase tax transparency, fairness, and investor protections. Tokenisation doesn’t undermine those goals—it enhances them.
By integrating tokenised investment units into existing provisions, policymakers can:
- Improve tax integrity and reduce lost government revenues.
- Automate compliance, reducing admin costs for funds and regulators.
- Ensure a technically correct, operationally effective, and implementable transition to modernised trust structures.
The alternative? Sticking to outdated compliance models while tax avoidance loopholes persist and enforcement costs rise. That’s not good policy.
It’s time to update the rules to match the technology. Tokenisation isn’t just the future of finance—it’s the future of better tax compliance.
Regulation should evolve alongside innovation—not against it.
Author’s Perspective: Experience in MITs, AMITs, and Digital Asset Compliance
My involvement in MITs and AMITs didn’t happen by accident. It grew from my proactive role as a CFO in the AIC CFO Forum, where discussions around tax structures, compliance challenges, and evolving financial instruments are at the forefront. Working closely with superannuation funds, I’ve seen first-hand how trust structures must adapt to digital asset innovations—not just for efficiency, but for regulatory integrity.
As the Principal of Thaddeus Martin Consulting (TMC), I help funds, investment managers, and institutional stakeholders navigate the complexities of digital assets. Whether it’s ensuring compliance with tax frameworks, integrating blockchain solutions into trust structures, or optimising fund reporting and attribution, TMC provides strategic insight to help firms move forward confidently.
We don’t just talk about digital transformation—we help organisations implement it, ensuring that tokenised investment structures work within existing regulatory frameworks while enhancing compliance, transparency, and operational efficiency.
For funds looking to stay ahead in the evolving world of AMITs, MITs, and digital finance, understanding how tokenisation can reduce tax risk, improve investor reporting, and streamline compliance isn’t optional—it’s essential. That’s where TMC comes in.