Step 4: Working out the amount to include in assessable income - box D



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End of attention

The final step in applying the deemed rate of return method is to convert the FIF amount to Australian currency.

Use the rate of exchange that applied at the end of the notional accounting period to convert each FIF amount in box C to FIF income in Australian currency. [sections 593 and 594]

The FIF income is included in your assessable income, subject to reduction by certain assessable distributions from the FLP. Chapter 6: Avoiding double taxation has more information.


Lal acquires an FLP on 1 January 2003 for $HK250,000.

For the first year, under the deemed rate of return method, he multiplies the opening value by the deemed rate of return as follows:

$HK250,000 x 8.79%* x (181/365)

FIF income = $HK10,897

Lal includes the FIF income in his assessable income after converting it to Australian dollars using the exchange rate applicable on 30 June.

Last modified: 27 May 2005QC 17512