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 because you have a beneficial interest in that FIF without the legal title to it. [section 488]
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)]
Eligible finance share
A share in a company is an eligible finance share if:
- the shareholder is an Australian financial institution or subsidiary
- the share was issued by the company in the ordinary course of business carried on by the shareholder, and
- the shareholder is not an associate of the company.
Section 327 of the ITAA 1936 has more detail.