ato logo
Search Suggestion:

Foreign investment funds guide 2009-10

This guide will help you work out how to include your foreign investment funds (FIF) income in your assessable income.

Last updated 28 June 2010

About this guide

This guide will help you work out how to include your foreign investment funds (FIF) income in your assessable income. It does not include all the qualifications and conditions of the FIF measures that may affect how you work out the amount of FIF income to include in your assessable income for a particular year.

If you need more information, phone the Individual Infoline on 13 28 61 or consult a registered tax adviser.

Do you need to use this guide?

Did you have interests in a foreign company, a foreign trust or a foreign life assurance policy? (Read Chapter 2: Key concepts of the FIF measures and Chapter 5: Foreign life assurance policies.)

No

The foreign investment fund (FIF) measures do not apply to you. You do not need to use this guide.

Yes

Read on.

If you were a resident at any time during the income year, did you:

No

The FIF measures do not apply to you. You do not need to use this guide.

Yes

Read on.

Does an exemption apply to your interest in a FIF or FLP? (Read Chapter 3: Exemptions.)

No

Read on.

Yes

Do not include any amount in your assessable income from the interests in that FIF or FLP. Read Chapter 7: Record keeping to work out the records that you need to keep, then read on.

Determining the amount of FIF income to include in your assessable income

There are three methods for working out taxation for an interest in a FIF and two methods for an interest in a FLP, depending on your access to certain information on the FIF or FLP.

Interest in a FIF

Read Chapter 4: Methods of FIF taxation.

  • Most taxpayers liable to tax under the FIF measures will use the market value method.
  • Use the deemed rate of return method if you are unable to establish a market value for your FIF interest and you have not elected to use the calculation method.
  • Use the calculation method if you have access to the financial accounts of the FIF and you are able to determine the FIF's calculated profit or calculated loss. For income years commencing on or after 1 July 2008 certain taxpayers using the FIF calculation method to determine income to be attributed from a foreign company have a further choice (within that method) to calculate that income using the CFC rules.

Interest in a FLP

Read Chapter 5: Foreign life assurance policies.

If you have invested in a FLP, you can use:

  • the deemed rate of return method, or
  • the cash surrender method.

Abbreviations

CFC

controlled foreign company

CFT

controlled foreign trust

FIF

foreign investment fund

FLP

foreign life assurance policy

ITAA 1936

Income Tax Assessment Act 1936

ITAA 1997

Income Tax Assessment Act 1997

MEC group

multiple entry consolidated group

Note: Unless indicated otherwise, throughout this guide all sections and subsections in square brackets refer to the Income Tax Assessment Act 1936 (ITAA 1936).

QC22887