Individuals (other than trustees) with small levels of offshore investments can qualify for an exemption. You may qualify for this exemption in one of two ways.
- If the total of your interests and the interests of your associates in foreign companies, trusts and life policies is not more than $A50,000, the FIF taxation provisions will not apply to the your investments. [subsection 515(1)]
- If the total of your interests and your associates' interests in foreign companies, trusts and life policies and interests in resident public unit trusts does not exceed $A50,000, the FIF taxation provisions will not apply in calculating your share of net income of the resident public unit trust. [subsections 515(2) and 96A(2)]
Associates
An associate includes:
- your spouse, but does not include your spouse who, although legally married to you, has been living separately and apart from you for at least 12 months
- your child, whether or not the child lives with you
- your stepchild who lives with you
- your partner in a partnership and a spouse or child of the partner
- a trustee of a trust, other than a public unit trust or an eligible Part IX entity - broadly, a superannuation fund, an approved deposit fund or a pooled superannuation trust - if you or an associate benefit under the trust, and
- a company in which you and your associates have a majority voting interest or which is sufficiently influenced by your and your associates.
If you are under 18 years of age, your associates include, in addition to the above:
- your parents, and
- your brother or sister. [section 491]
Example: Exemption for an interest of $A50,000 or less
A. Direct interests of taxpayer and associates in FIFs and FLPs |
B. Direct interests of taxpayer and associates in resident public unit trusts |
Total A & B |
Does small investor exemption apply to direct interests in FIFs and FLPs? |
Does small investor exemption apply to interests in resident public unit trusts? |
|---|---|---|---|---|
$30,000 |
$15,000 |
$45,000 |
Yes |
Yes |
$26,000 |
$25,000 |
$51,000 |
Yes |
Yes |
$50,000 |
$1,000 |
$51,000 |
Yes |
No - taxpayer's share of net income of resident public unit trust includes amounts which relate to FIF income of the trust. |
nil |
$60,000 |
$60,000 |
Yes |
No - taxpayer's share of the net income of the resident public unit trust includes those amounts which relate to FIF income of the trust. |
End of example
Direct interests in FIFs and FLPs
If the direct interests in FIFs and foreign life assurance policies (FLPs) of you and your associates are $A50,000 or less, the FIF taxation provisions do not apply. [subsection 515(1)].
Direct interests in resident public unit trusts
This test measures the interests in Australian resident public unit trusts, FIFs and FLPs of you and your associates.
If the total of these interests is $A50,000 or less, your share of the net income of the resident public unit trust will not include any amount included in the net income of the trust under the FIF measures because of the FIF interests held by the trust.
If the interests are more than $50,000 under both tests, you do not qualify for the exemption. The example above sets out how the exemption applies. [subsection 96A(2)].
Exemption for visitors to Australia
If you are a natural person who is a resident of Australia at the end of an income year, you qualify for this exemption if you satisfy all of the following conditions.
- You have a current temporary entry visa granted under the Migration Act 1958.
- The period of time from the issue date of the first entry visa, which is current until its expiry date, is four years or less. If the current temporary visa was issued as an extension of an earlier visa, the period of time from the issue date of the earliest temporary visa until the expiry date of the current visa must be four years or less.
- You are not awaiting the outcome of an application for permanent residency under the Migration Act 1958.
A new temporary entry visa or permit issued under the Migration Act as an extension of the original temporary entry visa or permit is considered to be an extension of the original visa or permit.
New Zealand citizens
If you are a New Zealand citizen, you are exempt from the FIF measures if, at the end of the income year:
- you have not lived in Australia for more than four years
- you would have been required to hold a temporary entry visa if you had not been a New Zealand citizen, and
- you do not intend to live in Australia permanently. [section 517]