This step determines the opening value of your interest in the FIF at the beginning of the notional accounting period.
Opening value where the interests in a FIF were acquired during a notional accounting period
If you acquired the interests in a FIF during the notional accounting period, the opening value of the interests is the consideration you paid or gave for the acquisition. [section 554]
Opening value where the deemed rate of return method applied in the previous year
Where you applied the deemed rate of return method to a group of FIFs in the immediately previous notional accounting period, work out the opening value of the FIF for the current period as follows:
- use the opening value of the group of FIFs at the beginning of the previous period
- add the FIF income for the previous notional accounting period
- take away any distributions made by the FIF in the previous notional accounting period. [section 551]
Distributions include any amount paid or credited or property distributed to you by the FIF, either as income or capital. They include the issue to you of further interests in the FIF in lieu of your entitlement to a payment by the FIF.
Distributions do not include the issue to you of further interests where you do not pay consideration or forgo payment in exchange for those further interests. [section 474]
Opening value where the market value method applied in the previous year
If the market value method applied in the immediately previous notional accounting period, the opening value for the current year is the market value of the interest in the FIF at the end of that period. [section 553]
Opening value where the calculation method or an exemption applied in the previous year
Where the calculation method or an exemption from FIF taxation applied or the operative provision did not apply in the immediately previous notional accounting period, use one of the following methods to decide the opening value for the current period.
- Where the FIF interest was quoted on an approved stock exchange at any time during the immediately previous notional accounting period, use the quoted price for the latest day of that period as the opening value for the current period.
- If the FIF interest was not quoted on an approved stock exchange on the last day of the previous notional accounting period, begin with the original consideration paid and apply the deemed rate of return notionally to every notional accounting period, from the date of acquisition up to the immediately previous notional accounting period. This determines an opening value for the current period. [section 552]
Previous year losses
When you switch to the deemed rate of return method, you cannot apply previous year FIF losses that you accumulated under either the calculation method or the market value method.