• What is an interest in a FIF?

    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

    Foreign companies

    An interest in a foreign company that is a FIF includes:

    • a share other than an eligible finance share in the company

      A share includes any interest in the capital of the company in the nature of a share or stock. Examples include ordinary, preference, bonus, and redeemable preference shares, as well as shares with deferred rights.
    • a legal document that confers an entitlement to acquire such a share including an entitlement arising from an option or convertible note. [subsection 483(1)]

    Even if your name does not appear on a share certificate or share register of the foreign company as the legal owner of those shares, you are still held to have an interest in the FIF if you have a beneficial interest in that FIF (without the legal title to it). [section 488]

    Eligible finance share

    A share in a company is an eligible finance share if:

    • the shareholder is an Australian financial institution (AFI) or AFI subsidiary
    • the share was issued to the shareholder by the company in the ordinary course of business carried on by the shareholder
    • the shareholder is not an associate of the company, and
    • payments of dividends on the share may reasonably be regarded as equivalent to the payment of interest on a loan. [section 327]

    Foreign trusts

    An interest in a FIF that is a foreign trust is:

    • an interest in the capital or income of the trust - including a unit in a unit trust, or
    • a legal document that confers an entitlement to acquire such an interest including an entitlement arising from an option or convertible note. [subsection 483(2)]
    Last modified: 28 Jun 2007QC 27895