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  • Exemption for a balanced investment portfolio in FIFs



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

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    Broadly, an exemption may be available if you invest in foreign companies or foreign trusts and all your non-exempt FIF interests are not more than 10% of the total value of your investment portfolio.

    For more information, phone the Business Tax Reform Infoline on 13 28 66.

    For the purposes of this exemption, your total investments do not include your interests which, at the end of a notional accounting period, are excluded from the FIF measures because of exemptions for:

    • the attributable taxpayer
    • interest in an employer-sponsored superannuation fund.

    You value your FIF interests at the end of the income year at cost or market value, whichever is the greater. [section 525]

    There are no restrictions on the types of FIFs that are eligible for this balanced portfolio exemption. The FIFs may include non-exempt activities such as financial services and they may or may not be listed on any stock exchange, approved or otherwise. They may also include trusts.

    In the example below, Marika's interests in FIFs are excluded from the FIF measures because her interests in non-exempt FIFs - the foreign funds management company and the Swedish Foreign Trust - are not more than 5% of her total FIF interests.

    The United Kingdom superannuation fund is not included when working out total FIF interests, as it is an employer-sponsored superannuation fund.

    Example: Investments in FIFs

    Marika's FIF interest

    Amount invested in FIFs

    Exempt FIFs: percentage of total investments

    Non-exempt FIFs: percentage of total investments

    Company X - exempt shares listed on Athens stock exchange


    ($25,000 ÷ $171,000) × (100 ÷ 1) = 14.6%


    Foreign funds management company - non-exempt

    $3,000 (subject to exemption)


    ($3,000 ÷ $171,000) × (100 ÷ 1) = 1.8%

    Company Y - satisfies active business exemption


    ($75,000 ÷ $171,000) × 100 ÷ 1 = 43.9%


    United Kingdom employer superannuation fund


    This is a Division 11 amount and is not included in the total of FIF investments


    Bank of United States - satisfies bank exemption


    ($63,000 ÷ $171,000) × (100 ÷ 1) = 36.8%


    Swedish Foreign Trust - non-exempt



    ($5,000 ÷ $171,000) × (100 ÷ 1) = 2.9%






    End of example
    Last modified: 27 May 2005QC 17512