How to calculate your 2015 FIF income
NOTE: There is a newer version of this article. See How to calculate your 2017 FIF income for more information.
This morning the New Zealand Inland Revenue Department (IRD) announced their publication of the 2015 Australian Share Exemption list for Foreign Investment Fund (FIF) income reporting:
What is a foreign investment fund (FIF)?
As stated by the IRD, a foreign investment fund (FIF) is an offshore investment held by a New Zealand-resident taxpayer who holds:
- less than 10% of the shares in a foreign company
- less than 10% of the units in a foreign unit trust
- between 10% and 40% of the shares in a foreign company which is not a CFC
- an interest in a life insurance policy where a FIF is the insurer and the policy is not offered or entered into in New Zealand
- an interest in a foreign superannuation scheme.
It does not include interest earned from term deposits, bonds, debentures or money lent.
How to calculate your FIF income using Sharesight
Investors who have certain types of overseas investments may have foreign investment fund (FIF) income as a result. And while the IRD has a nifty little tool that lets you check if you are required to do anything under the FIF rules, if you determine that you do, the actual calculations can get quite tricky. That’s where Sharesight comes in. As an NZ Expert or Pro plan user, you can run your own FIF Income reports in just a few clicks, allowing you to:
- Determine which of your holdings are subject to FIF (any holdings on the IRD 871 exclusion list are automatically excluded)
- Calculate your ‘Peak holding balance’ so that you can determine whether you exceed the FIF threshold ($50,000 for individuals)
- Calculate your FIF income under both the Fair Dividend Rate method and Comparative Value Method (Generally you are permitted to use either methodology, but check with your accountant if you are unsure as there are some exceptions to this)
Unless you’re a maths genius, we believe the hours of time you’ll save this tax season is more than worth upgrading to an Expert or Sharesight Pro plan! But don’t take our word for it – here’s what a couple Sharesight clients have to say about our FIF income reports:
I used the FIF reports for the first time and it greatly assisted the preparation of 2013/14 years tax returns. Sent copies of report to IRD with the returns and it was no problem. Well done Sharesight and well worth upgrading to include this reporting facility.
Richard Maddren — Sharesight client since 2008
We have been using this great app for several years. It makes it easy to review portfolio performance, keep track of income and manage those awful FIF calculations at tax time. The subscription is easily recovered in time savings at year end…
Margaret Holmes — Sharesight client since 2010