You are exempt from the FIF measures if you are an Australian resident and are also:
- an attributable taxpayer of a transferor trust or CFT [section 493]
- a beneficiary of a deceased estate - see What is a foreign investment fund (FIF)? in chapter 2 [section 481]
- an exempt small investor - see Exemption for an interest of A$50,000 or less in chapter 3 [section 515]
- a temporary resident - see Exemption for temporary residents in chapter 3 (section 768-965 of the ITAA 1997)
- a member of an employer-sponsored foreign superannuation fund - see Exemption for employer-sponsored foreign superannuation in chapter 3 [section 519]
- a complying superannuation entity, a life insurance company (in regard to certain assets) and certain fixed trusts - see Exemption for complying superannuation entities, certain assets of life insurance companies and certain fixed trusts in chapter 3. [Division 11A]
Exempt attributable taxpayer
An attributable taxpayer of a transferor trust or CFT is not taxed under the FIF measures because they are attributed income from the foreign trust under other provisions of the ITAA 1936. See Exemption for attributable taxpayers in chapter 3. [sections 102AAA, 102 AAZG, 342, 348 and 493]
Small investor exclusion
Certain small investors are exempt from the FIF measures. See Exemption for an interest of A$50,000 or less in chapter 3 for more information.
Similarly, when working out a small investor's share of the net income of a resident public unit trust, FIF income is excluded from the trust estate's assessable income. This exclusion applies only to natural persons and will apply to you if the sum of your interests and those of your associates in FIFs, FLPs and resident public unit trusts at the end of the income year are $50,000 or less. [subsection 96A(2)]
In a subsequent year of income, you must work out the trust's net income by ignoring attribution credits which arose during income years when you were exempt because of this small investor's exemption. [paragraph 96A(2)(d)]
This means that you, as the beneficiary, will not benefit from:
- the exemption, which applies for amounts previously attributed under the FIF measures [section 23AK], or
- a reduction in the disposal consideration of the FIF interest because of an unused FIF attribution account surplus from income attributed but not distributed before disposal of the FIF interest. [section 613]
These two benefits arise because FIF income was included in the net income of the trust in a year when you, as a beneficiary of the public unit trust, were not taxed on that FIF income because of the small investor's exclusion. [paragraphs 96A(2)(d) to (e)]
Exempt beneficiaries of a foreign deceased estate
The measures do not apply to an Australian resident beneficiary of a foreign trust of a deceased estate.
The deceased estate is not covered by the FIF measures. The measures do not apply even if a court has made an order on the deceased estate. For more information, see What is a foreign investment fund (FIF)? in chapter 2. Also see Deceased estates later in this chapter.