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  • Foreign investment funds guide (including update)

    About the Foreign investment funds guide

    Download guide and update in pdf



    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

    End of attention

    If you would prefer to read this document in portable document format (pdf), download a pdf version of this guide here.

    In October 2001, a minor error was identified and the correction incorporated into this document. The incorrect text is under paragraph 3 of page 19 in the paper publication (read the correct paragraph here).

    About this publication

    If you have an enquiry relating to your circumstances which this publication does not cover, ring the general enquiries helpline 13 28 61 or get help from a tax adviser.

    As part of our commitment to produce accurate publications, taxpayers will not be subject to penalties if it is demonstrated that they based a tax claim on wrong information supplied by the ATO.

    How self-assessment affects most individuals

    Self-assessment means the Australian Taxation Office (ATO) uses the information you give in your tax return to work out your refund or tax bill. You are required by law to make sure you have shown all your assessable income and claimed only the deductions and rebates to which you are entitled.

    What are your responsibilities?

    Even if someone else-including a tax agent-helps you to prepare your tax return, you are still legally responsible for the accuracy of the information.

    What if you lodge an incorrect tax return?

    Our computers continually check for missing or wrong information. We have audit programs designed to detect where taxpayers have not declared all of their assessable income or where they have incorrectly claimed deductions or rebates. If you become aware that your tax return is incorrect, you must contact us straightaway.

    Initiatives to complement self-assessment

    There are a number of initiatives administered by the ATO which complement self-assessment. Examples include:

    • a change in penalty provisions so that, if you take reasonable care with your tax affairs, you will not receive a penalty for honest mistakes-but please note that interest on omitted income or overclaimed deductions and rebates could still be payable
    • the process for applying for a private ruling
    • your entitlement to interest on early payment-or overpayment-of a tax debt
    • the process for applying for an amendment if you find you left something out of your tax return.

    Do you need to ask for a private ruling?

    If you have a concern about the way tax law applies to your personal tax affairs, you may want to ask for a private ruling. A private ruling will relate just to your situation. Write to the ATO describing your situation in detail and ask for advice. Include your tax file number. If you lodge your tax return before you receive your private ruling, be aware that the ruling may alter the accuracy of your return.

    You can ask for a review of a private ruling decision if you disagree with it, even if you have not received your assessment. The tax office that made the ruling can give you more information about review procedures.


    Reader feedback helps us to improve the information we provide. If you have you any comments to make about this booklet, please write to:

    The Editor
    Public Assistance Branch
    Australian Taxation Office
    2 Constitution Avenue
    CANBERRA  ACT  2601

    Summary of how the foreign investment funds legislation could affect you

    Did you have interests in a foreign company, a foreign trust or a foreign life policy?

    Read chapter 2 and chapter 5 of this guide.




    The FIF measures do not apply to you.

    If you were a resident at any time during the year of income, did you:

    • have an interest in a foreign investment fund (FIF) at the end of the income year or
    • have an interest in a foreign life policy (FLP) at any time during the income year?

    Read chapter 2 and chapter 5 of this guide.




    The FIF measures do not apply to you.

    Does an exemption apply to your interest in a FIF or FLP?

    Read chapter 3 of this guide.




    Do not include any amount in your assessable income from the interests in that FIF. Read chapter 8 of this guide to work out the records that you need to keep.

    Determining the amount of foreign investment fund income to include in your assessable income

    There are three methods for working out taxation for an interest in a FIF and two methods for an interest in a FLP, depending on your access to certain information on the FIF or FLP.

    Interest in a FIF - read chapter 4 of this guide

    • The majority of taxpayers liable to tax under the FIF measures will use the market value method.
    • Use the deemed rate of return method if you are unable to establish a market value for your FIF interest and you have not elected to use the calculation method.
    • Use the calculation method if you have access to the financial accounts of the FIF and you are able to determine your choice of the FIF's calculated profit or calculated loss.

    Interest in a FLP - read chapter 5 of this guide

    If you have invested in a foreign life policy, you can use:




    Australian Taxation Office


    controlled foreign company


    controlled foreign trust


    foreign investment fund


    foreign life assurance policy

    The Act

    Income Tax Assessment Act 1936

    Last modified: 08 Jun 2005QC 27386