How to calculate your 2016 FIF income
NOTE: There is a newer version of this article. See How to calculate your 2017 FIF income for more information.
Sharesight is designed to help investors track their portfolio performance day-to-day as well as throughout the year. And by pulling investment data from multiple sources into one place, Sharesight eliminates the paper-chasing and general headaches normally associated with tax reporting. But for Kiwi investors, it’s our FIF report that’s the real game-changer come tax time. We’ll explain why, but first:
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.
Calculate your FIF income using Sharesight
As a result of these IRD rules, investors who have certain types of overseas investments may have FIF income. And while the IRD has an online 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. This allows you to:
1. Determine which of your holdings are subject to FIF
Sharesight automatically excludes any holdings on the Australian share exemption list 2016 IR871.
2. Calculate your ‘Peak holding balance’
This determines whether you exceed the FIF threshold ($50,000 for individuals)
3. Calculate your FIF income
Sharesight calculates 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).
Why spend the time struggling with maths equations and complicated tax rules when Sharesight can calculate your FIF income for you, in just a few clicks? Our Expert and Pro plan clients agree:
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
Get your FIF Report today
Upgrade to an NZ Expert plan for only $39/month and you’ll get INSTANT access to your FIF Report, as well as other advanced features including FREE email support if you have any questions.