Reporting investment income
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Investments and investment income
Investments reported in the Annual investment income report (AIIR) include:
- interest bearing deposits and accounts with financial institutions
- a loan of money to a body corporate or government body
- a deposit of money with a solicitor for the purpose of being invested by the solicitor or lent under an agreement to be arranged by or on behalf of the solicitor
- units in a unit trust
- shares in a public company
- an investment related to betting or chance.
Investment income derived from the types of investments above include income from:
- savings accounts
- interest bearing cheque accounts
- term deposits or fixed deposits
- dividends derived via means that may include:
- interim dividends
- final dividends
- off-market share buy-backs
- capital restructures and demergers
- deferred interest securities
- units in a unit trust
- capital gains on a unit trust distribution
- stapled securities.
If you offer other investment products not listed above, and you need information about reporting income from these investments in the AIIR, contact us for assistance:
Interest related to consumer finance
Don't report interest related to consumer finance – for example, don't report interest paid by a company to a bank on a business loan from the bank.
Stapled securities are comprised of two or more securities that are traded as one – for example, a share and a unit in a unit trust.
Report the income by including one investor account record for each type of security. For example, with a unit trust stapled to a share, include an investor account record for the trust distribution and another one for the directly paid company dividend. Each must be accompanied by an investor record.
Date of payment for dividends
The date of payment is the date that the income is derived by the client. For example, if a security goes ex in June 2016 and payment occurs in July 2016, the dividend would be included in the 2016–17 financial year.
If a dividend is reinvested, the income is taken to have been paid at the time of reinvestment.
Investment income treated as dividends for income tax purposes
Corporate unit trusts and public trading trusts whose distributions to unit holders are treated as dividends for income tax purposes should report the payments in the DIV field of the AIIR rather than the UTD field.
'Type of investment' for private companies
A private company should report item 3 in the Type of investment field. A loan of money to a body corporate is an investment covered by the TFN rules. This kind of investment is covered by item 3 in the table at subsection 202D(1) of the Income Tax Assessment Act 1936.
The most usual way for an entity to be incorporated is by registering as a company with the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. Registration of the company with ASIC can be as a:
- proprietary company (also commonly called a 'private company')
- public company, which may or may not be listed on the Australian Stock Exchange (it is an 'unlisted company' if not listed).
Small private companies often have a relatively small number of investors. Loans made to these companies (other than those related to consumer finance) are still an investment covered by the TFN rules. If there were less than ten investments in the company during the year, and no withholding from any investments, the company does not need to lodge an AIIR but may need to lodge a Dividend and interest schedule (NAT 8030) as part of the company tax return.
Reporting withholding for non-residents
You must withhold from interest, unfranked dividends and royalties paid to non-residents, and send the withheld amounts to us.
You need to report:
Credit for amounts withheld from unit trust distributions under foreign resident withholding relates to the amount of tax withheld and paid to us from trust income because of the operation of foreign resident withholding for particular types of activities. These activities are:
- promoting or organising casino gaming junket arrangements
- entertainment and sports activities
- contracts for the construction, installation and upgrading of buildings, plant and fixtures, and associated activities.
Exploration development credits
The Exploration Development Incentive enables greenfield mineral explorers (ie eligible exploration companies) that have incurred eligible expenditure to distribute exploration credits to shareholders.
The credit distributed to shareholders is reported in the AIIR for the financial year after it was paid. For example, if the credit was distributed in 2015 it is reported in the 2016 AIIR.
The Annual investment income report includes details of investment income paid to investors.