• Exemption for an interest of $A50,000 or less

    Attention

    Warning:

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

    End of attention

    A small investor exemption is provided for both direct and indirect interests in FIFs. The exemption is only available if you are a natural person and your interest, together with those of your associates, in FIFs, FLPs and resident public unit trusts is $A50,000 or less at the end of the financial year. [SECTIONS 96A and 515]

    Associates

    An associate includes:

    • your spouse, but does not include your spouse who, although legally married to you, has been living separately and apart from you for at least 12 months
    • your child, whether or not the child lives with you
    • your stepchild who lives with you
    • your partner in a partnership and a spouse or child of the partner
    • a trustee of a trust, other than a public unit trust or an eligible Part IX entity-broadly, a superannuation fund, an approved deposit fund or a pooled superannuation trust-if you or an associate benefit under the trust, and
    • a company in which you and your associates have a majority voting interest or which is sufficiently influenced by your and your associates.

    If you are under 18 years of age, your associates include, in addition to the above:

    • your parents, and
    • your brother or sister. [SECTION 491]

    Example

    Exemption for an interest of $A50,000 or less

    Direct interests of the taxpayer and associates in FIFs and FLPs

    Direct interests of the taxpayer and associates in resident public unit trusts

    Total of interests in FIFs, FLPs and resident public unit trusts

    Application of the small investor exemption to the taxpayer's direct interests in FIFs and FLPs

    Application of the small investor exemption to the taxpayer's interests in resident public unit trusts

    $30,000

    $15,000

    $45,000

    Exemption applies-taxpayer's direct interests in FIFs and FLPs are exempt from the FIF measures.

    Exemption applies-taxpayer's share of the resident public unit trust's net income does not include those amounts which relate to FIF income of the trust.

    $26,000

    $25,000

    $51,000

    Exemption applies-taxpayer's direct interests in FIFs and FLPs are exempt from the FIF measures.

    Exemption does not apply-taxpayer's share of the net income of the resident public unit trust includes those amounts which relate to FIF income of the trust.

    $50,000

    $1,000

    $51,000

    Exemption applies-taxpayer's direct interests in FIFs and FLPs are exempt from the FIF measures.

    Exemption does not apply-taxpayer's share of the net income of the resident public unit trust includes those amounts which relate to FIF income of the trust.

    nil

    $60,000

    $60,000

    Exemption applies-taxpayer's direct interests in FIFs and FLPs are exempt from the FIF measures.

    Exemption does not apply-taxpayer's share of the net income of the resident public unit trust includes those amounts which relate to FIF income of the trust.

    Direct interests in FIFs and FLPs

    Where the direct interests in FIFs and FLPs of you and your associates are $A50,000 or less, the FIF taxation provisions do not apply. [SUBSECTION 515(1)]

    Direct interests in resident public unit trusts

    This test measures the interests in Australian resident public unit trusts, FIFs and FLPs of you and your associates. Where the total of these interests is $A50,000 or less, your share of the net income of the resident public unit trust will not include any amount included in the net income of the trust under the FIF measures because of the FIF interests held by the trust. If the interests are more than $50,000 under both tests, then the exemption is not available. The example on page 9 sets out how the exemption applies. [SUBSECTION 96A(2)]

    Last modified: 08 Jun 2005QC 27386