ATO Interpretative Decision

ATO ID 2004/707 (Withdrawn)

Income tax

Foreign Investment Fund: investments in Personal Equity Plans
FOI status: may be released

This ATO ID is withdrawn because it contains a view in repect of provisions of the Income Tax Assessment Act 1936 that don't apply after the 2009-10 income year. Despite its withdrawal, this ATOID continues to be a precedential view in respect of decisions for income years up to, and including, the 2009-2010 income year.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

Status of this decision: Decision Withdrawn 19 November 2010

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

This ATOID provides you with the following level of protection:

If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Is the taxpayer's accrued foreign income from interests in Personal Equity Plans (PEPs) included in the taxpayer's assessable income under section 529 of the Income Tax Assessment Act 1936 (ITAA 1936)?

Decision

Yes. The investments in the Personal Equity Plans (PEPs) constitute interests in FIFs (sections 481 and 483(2) ITAA 1936) and the accrued foreign income relating to these interests are included in the taxpayer's assessable income under section 529 of the ITAA 1936.

Facts

The taxpayer, while a resident of the United Kingdom, invested in some PEPs. The investments in the PEPs were exempt from tax in the United Kingdom.

The taxpayer's investments in the PEPs exceeded A$50,000.

The taxpayer relocated to Australia and became an Australian resident.

While the taxpayer was an Australian resident, the investments remained in the PEPs and accrued foreign income.

Reasons for Decision

The Foreign Investment Fund (FIF) measures are contained in Part XI of ITAA 1936 and apply to Australian residents who have an interest in a foreign company or trust at the end of a year of income.

The PEP constitutes a FIF as it is a foreign trust (section 481 and subsection 483(2) of the ITAA 1936).

An Australian resident taxpayer who has an interest in a FIF is assessable in respect of the FIF income that accrues during the time the taxpayer held interests in the FIF (sections 485 and 529 of the ITAA 1936).

Notwithstanding the income may be exempt in the United Kingdom, the investment is still subject to the FIF regime.

Date of decision: 10 March 2003

Year of income: Year ended 30 June 2004

Legislative References:
Income Tax Assessment Act 1936
   section 481
   subsection 483(2)
   section 485
   section 515
   section 529

Keywords
Foreign investment funds
International tax

Business Line: Public Groups and International

Date of publication: 27 August 2004

ISSN: 1445-2782

history

	Date:	Version:
	10 March 2003	Original statement
You are here →	19 November 2010	Archived

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