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Exemption for a balanced investment portfolio in FIFs

Last updated 7 June 2005

If you invest in a wide spread of shares in foreign companies, you may find that your investments in non-exempt FIF activities may typically be less than 5% of your investment portfolio. Because these cases of portfolio diversification involve minimal scope for deferral, an exemption is provided for investments in non-exempt FIF activities if their aggregate value is not more than 5% of the value of your total investments in FIFs.

For the purposes of this exemption, your total investments do not include your interests which, at the end of a notional accounting period, are excluded from the FIF measures because of exemptions for:

You value your FIF interests at the end of the income year at cost or market value, whichever is the greater. [SECTION 525]

There are no restrictions on the types of FIFs that are eligible for this balanced portfolio exemption. The FIFs may include non-exempt activities such as financial services. They may or may not be listed on any stock exchange, approved or otherwise. They may also include trusts.

In the example below, Marika's interests in FIFs are excluded from the FIF measures because her interests in non-exempt FIFs-the foreign funds management company and the Swedish Foreign Trust-are not more than 5% of her total FIF interests.

The United Kingdom superannuation fund is not included when working out total FIF interests, as it is an employer-sponsored superannuation fund.

Start of example


Investments in FIFs

Marika's FIF interest

Amount invested in FIFs

Exempt FIFs: percentage of total investments

Non-exempt FIFs: percentage of total investments

Company X-exempt shares listed on Athens stock exchange


($25,000 ÷ $171,000) × (100 ÷ 1) = 14.6%


Foreign funds management company-non-exempt



($3,000/$171,000) x (100/1)= 1.8%

Company Y-satisfies active business exemption


($75,000 ÷ $171,000) × 100 ÷ 1 = 43.9%


United Kingdom employer superannuation fund


This is a Division 11 amount and is not included in the total of FIF investments


Bank of United States-satisfies bank exemption


($63,000 ÷ $171,000) × (100 ÷ 1) = 36.8%


Swedish Foreign Trust-non-exempt



($5,000 ÷ $171,000) × (100 ÷ 1)=2.9%






End of example