Frasers Hospitality REIT Australia unit sees tax rate rise to 37.5%

With the higher tax, the unit expects a $1.3m drop in distributable income for FY2024.

Frasers Hospitality Real Estate Investment Trust's (FH-REIT) Australia unit, FHT Australia Trust (FHTAT), will face a higher withholding tax rate of 37.5% after failing to meet the condition that no foreign individual holds more than a 10% indirect interest in the trust.

In a bourse filing, FH-REIT disclosed that a share swap between InterBev Investment Limited (IBIL) and TCC Assets Limited (TCCAL) increased the latter's effective stake in Frasers Property Limited (FPL) to 86.89%. 

The increase caused a breach of the condition limiting a foreigner's effective interest in FH-REIT and FHTAT to no more than 10%.

With the condition breach, FHTAT will no longer meet the 10% foreign resident individual test, disqualifying it from withholding Managed Investment Trust (MIT) status for FY2024. 

In July 2024, FHTAT had qualified for a concessionary 15% withholding tax rate. With the loss of this preferential tax rate, FHTAT's distributable income for FY2024 is expected to decrease by approximately $1.3m.