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 does not exceed $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. [subsection 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 interests 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 |
No - therefore taxpayer's share of net income of resident public unit trust includes amounts which relate to FIF income of the trust. |
$50,000 |
$1,000 |
$51,000 |
Yes |
No - therefore taxpayer's share of net income of resident public unit trust includes amounts which relate to FIF income of the trust. |
$1,000 |
$60,000 |
$61,000 |
Yes |
No - therefore taxpayer's share of the net income of the resident public unit trust includes those amounts which relate to FIF income of the trust. |
$60,000 |
$60,000 |
$120,000 |
No |
No - therefore 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)]