• Notional accounting period of a FLP

    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 notional accounting period of your FLP is a 12 month period ending 30 June each year. You may elect a different notional accounting period if a cash surrender value of your FLP is available in the same month of each year. This election is irreversible for as long as you hold an interest in that particular FLP. Your FLP's new notional accounting period will begin:

    • on the first day of the month following the last day of the month in which the cash surrender value of your FLP is available in each year, and
    • in the month immediately prior to your electing a new notional accounting period in which the cash surrender value of your FLP is available each year. [SUBSECTIONS 487(3) and (7)]

    Example

    The current notional accounting period of Judith's FLP is 1 July to 30 June each year. In November of each year a cash surrender value will be available for her FLP. In September 1997 she elects to use a different notional accounting period for her FLP. The new notional accounting period will begin on the first day of the month following November-that is, 1 December-and end 12 months later on 30 November each year.

    However, the first new notional accounting period of Judith's FLP does not begin in the December following the election (December 1997) but begins in the December before the election is made (December 1996). Therefore the first new notional accounting period for Judith's FLP is 1 December 1996 to 30 November 1997.

    The months between the start of her old notional accounting period (1 July 1996) to the start of her new notional accounting period (1 December 1996) is also a notional accounting period-that is, 1 July 1996 to 30 November 1996. [SECTION 487]

    The FIF income for the period 1 July 1996 to 30 November 1996 will be returned in the 1996-97 income year. The FIF income for the period 1 December 1996 to 30 November 1997 will be included in the 1997-98 income year.

    Last modified: 08 Jun 2005QC 27386