INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART XI - FOREIGN INVESTMENT FUNDS AND FOREIGN LIFE ASSURANCE POLICIES  

Division 18 - How to determine whether Foreign Investment Fund income accrued to a taxpayer from a FIF or a FLP  

Subdivision C - Deemed rate of return method for FIFs  

SECTION 546   546   IF RELEVANT PERIOD STARTS ON 1 JANUARY 1993  
If the interests in the group were acquired before the start of the relevant period and that period starts on 1 January 1993, the value of the interests on the relevant day is to be determined in accordance with section 547 , 548 or 549 , as the case requires.

SECTION 547   VALUE OF INTERESTS AT START OF RELEVANT PERIOD (BEING 1 JANUARY 1993) - QUOTED PRICES  

547(1)   [Interest quoted on relevant day on stock market]  

If the interests in the group are included in a class of interests that were quoted on the relevant day on the stock market of an approved stock exchange, the value of the interests on that day is the amount worked out on the basis of the quoted price of such an interest on that day on that stock market.

547(2)   [Interest quoted within 12-month period before relevant day]  

If the interests in the group are included in a class of interests that were not quoted on the relevant day on the stock market of an approved stock exchange but were quoted on such a stock market within the period of 12 months immediately before that day, the value of the interests on that day is the amount worked out on the basis of the quoted price of such an interest on the latest day in that period on which the class of interests were so quoted.

547(3)   [Interests in trusts not quoted]  

If the interests in the group are interests in a trust that are included in a class of interests that were not quoted on a stock market of an approved stock exchange on the relevant day or within the period of 12 months immediately before that day:

(a) if there was on that day a buy-back or redemption price offered by the trustee or manager of the trust for such interests - the value of the interests on that day is the amount worked out on the basis of that price; or

(b) if paragraph (a) does not apply but there was within that period of 12 months such a buy-back or redemption price - the value of the interests on that day is the amount worked out on the basis of the latest such price that was offered within that period.

547(4)   [Conditions for subsec (3) to apply]  

Subsection (3) does not apply in relation to a buy-back or redemption price unless it:

(a) was publicly available and was offered to all persons having interests in that class; and

(b) was calculated by reference to the market values of the assets of the trust; and

(c) represents an arm's length valuation of the interest:

(i) in the case of a price referred to in paragraph (3)(a) - on the relevant day; or

(ii) in the case of a price referred to in paragraph (3)(b) - on the day it was offered.

547(5)   [Interest quoted in 2 or more stock markets]  

A reference in this section to a quoted price on the stock market of an approved stock exchange on a particular day of a class of interests is, if the class of interests are quoted on that day on 2 or more such stock markets, taken to be a reference to the quoted price on that day of that class of interests on whichever of those stock markets is nominated by the taxpayer.

SECTION 548   VALUE OF INTERESTS AT START OF RELEVANT PERIOD (BEING 1 JANUARY 1993) - FAIR MARKET VALUE  

548(1)   [Application]  

This section applies in relation to interests in the group if it is impracticable to value the interests in accordance with section 547 .

548(2)   [Certification by independent valuer]  

The value of the interests in the group on the relevant day is the amount certified in writing by an independent valuer to have been the fair market value of the interests on a day named in the certificate, being any day within the period of 3 months ending on the relevant day or the period of 3 months starting on the relevant day.

SECTION 549   VALUE OF INTERESTS AT START OF RELEVANT PERIOD (BEING 1 JANUARY 1993) - NOTIONAL PAST APPLICATION OF DEEMED RATE OF RETURN METHOD  

549(1)   [Application]  

This section applies in relation to interests in the group if it is impracticable to value the interests in accordance with section 547 or 548.

549(2)   [Valuation by notional deemed rate of return]  

The value of the interests in the group on the relevant day is the amount that would be that value if:

(a) this Part had been in force at all times since the interests were acquired; and

(b) the value of each interest at the date on which it was acquired was the consideration paid or given in respect of the acquisition by the taxpayer; and

(c) subject to paragraph (b), the deemed rate of return method had been used to determine whether any foreign investment fund income accrued to the taxpayer from the FIF in respect of each notional accounting period of the FIF before the relevant period.

SECTION 555   STEP 3 - DETERMINATION OF FOREIGN INVESTMENT FUND AMOUNT  

555(2)  

`` basic statutory interest rate '', in relation to a year of income, means such annual rate or rates of interest as are provided for by section 214A for the year of income or for periods included in the year of income, as the case may be;

Subdivision D - Calculation method for FIFs  

What are notional deductions

SECTION 570   NOTIONAL DEDUCTIONS - AMORTISATION OF EXPENDITURE IN ACQUIRING PROPERTY  

Subdivision E - Deemed rate of return method for FLPs  

SECTION 587   587   IF RELEVANT PERIOD STARTS ON 1 JANUARY 1993  
If the interests in the FLP were acquired before the start of the relevant period and that period starts on 1 January 1993, the value of the FLP on the relevant day is to be determined in accordance with section 588 .

SECTION 588   588   VALUE AT START OF RELEVANT PERIOD (BEING 1 JANUARY 1993)  
The value of the FLP on the relevant day is:

(a) subject to paragraph (b), the cash surrender value of the FLP on that day; or

(b) if the taxpayer elects that this paragraph is to apply in respect of the taxpayer's interests in the FLP - the consideration paid or given by the taxpayer in respect of the acquisition of those interests.

SECTION 592   STEP 3 - DETERMINATION OF FOREIGN INVESTMENT FUND AMOUNT  

592(2)  

``basic statutory interest rate'', in relation to a year of income, means such annual rate or rates as are provided for by section 214A for the year of income or for periods included in the year of income, as the case may be;

Subdivision F - Cash surrender value method for FLPs  

SECTION 597   597   IF NO CASH SURRENDER VALUE AVAILABLE ON 1 JANUARY 1993  
If:

(a) the relevant period started on 1 January 1993; and

(b) a cash surrender value was not available in respect of the taxpayer's interest in the FLP on 31 December 1992; and

(c) a cash surrender value was available in respect of that interest on a day earlier than 31 December 1992; and

(d) a cash surrender value was available in respect of that interest on a day later than 31 December 1992; and

(e) the earliest day on which a cash surrender value was available as mentioned in paragraph (d) was not more than 12 months after the latest day on which a cash surrender value was available as mentioned in paragraph (c);

the cash surrender value in respect of the taxpayer's interest in the FLP on 31 December 1992 is taken to have been one-half of the sum of:

(f) the latest cash surrender value that was available as mentioned in paragraph (c); and

(g) the earliest cash surrender value that was available as mentioned in paragraph (d).

Division 21 - Post-attribution asset disposals  

SECTION 613   REDUCTION OF DISPOSAL CONSIDERATION IF FIF ATTRIBUTED INCOME NOT DISTRIBUTED  

613(2)   [Reference to disposal of asset]  

For the purposes of this section, if the provision referred to in paragraph (1)(a) is in Part IIIA , references in this section to the disposal of an asset are references to the disposal of an asset within the meaning of that Part.