The FIF measures apply to a FIF’s notional accounting period – this generally coincides with your income year.
The notional accounting period provides a measurement point for the application of the FIF provisions and is referred to for a variety of purposes including the application of the various methods of determining FIF income and for some of the exemptions.
Important: You must return attributable income from the FIF for the notional accounting period which ends in your income year.
If the period for which a FIF prepares its accounts is different from your income year, and this period is not more than 12 months, you may elect for the notional accounting period of the FIF to coincide with the period for which the accounts of the FIF are prepared. This election cannot be revoked for as long as you have the FIF interest. [subsections 486(3) and (4)]
Example: Election to align notional accounting period
Gary acquires an interest in a FIF on 1 March 2003. The FIF prepares its annual accounts for the accounting period 1 April to 31 March and Gary elects to align the notional accounting period with the accounting period of the FIF.
He needs to include attributable income from the FIF for the period 1 March 2003 (the date of acquisition) to 31 March 2003 (the end of the elected notional period) in his tax return for the income year ended 30 June 2003. This is because the notional accounting period of the FIF ended during the income year for which Gary is lodging his tax return.
If the FIF prepared its annual accounts for the accounting period 1 January to 31 December each year and Gary elected to align the notional accounting period with the accounting period of the FIF, he would have to include attributable income from the FIF for the period 1 March 2003 (the date of acquisition) to 31 December 2003 (the end of the elected notional accounting period) in his return for the income year ended 30 June 2004 as that is the income year in which the notional accounting period ended.
Sections within Chapter 2: Key concepts of the FIF measures
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