Foreign investment fund rules

The foreign investment fund rules were repealed with effect for the 2010-2011 income year and later years. They are contained in former Part XI of the ITAA 1936.

These rules were designed to ensure that Australian taxpayers did not enjoy deferral benefits by accumulating income offshore. They complemented the controlled foreign company rules and the transferor trust rules by assessing foreign income accumulated in non-resident companies and trusts which were not subject to those other rules.

The rules had a very broad application and applied to taxpayers who were pursuing genuine investment opportunities offshore, as well as those who were pursuing tax minimisation strategies.

The rules taxed Australian investors on any increase in the value of their foreign investments each year. The rules also applied to interests in some foreign life policies held by Australian residents.

Further Information

For more information refer to Chapter 4Foreign income return form guide 2010-11.

End of further information
    Last modified: 21 Feb 2012QC 25356