The records you must keep for your interest in a FIF or a FLP will depend on the method you use to work out the foreign investment fund income.
Market value method or cash surrender value
If you use the market value method or the cash surrender value method, make and keep records showing how you worked out:
- any FIF income that you accrued or FIF loss that you incurred from an interest in a FIF or a FLP for the current period
- any FIF loss that you incurred from the interest in the FIF or the FLP for the previous periods that has not been used to reduce income. [sections 616 or 619]
Also keep records relating to:
- the market value of your interest in the FIF on the last day of the notional accounting period or the cash surrender value of your interest in the FLP on the last day of the notional accounting period
- distributions received from the FIF or the FLP
- disposal of interests in a FIF or a FLP
- the market value of your interest in the FIF or the cash surrender value of your interest in the FLP at the commencement of the notional accounting period, and
- acquisition of interests in a FIF or a FLP.
You also need to keep details of how you worked out the market value or cash surrender value.
If you used the market value method, keep a record of the following.
- If the market value is based on a quoted value on a stock exchange, record the quoted price, the date quoted, the class of interest - share - and the name of the stock exchange.
- If the market value is based on a buy-back or redemption price, record details of the offer of the buy-back or redemption price.
Previous year losses
You may offset an unapplied FIF loss from an interest in a FIF or a FLP against assessable income for the part of the income from that interest that was taxed previously. You may also carry forward an unapplied FIF loss and offset it against any market value increase from the same FIF or FLP in subsequent periods. Keep records of these losses.
Deemed rate of return method
If you use the deemed rate of return method of taxation, keep records showing how you worked out the foreign investment fund income that accrued to you from the FIF or FLP. [sections 617 or 619]
The records are to include details of:
- the calculation of the opening value of the FIF or the FLP interest
- the acquisition and sale of interests in a FIF or a FLP, and
- the distributions received from a FIF or the FLP.
The calculation method
At the first tier
For the first tier FIF, keep records detailing how you worked out:
- the calculated profit or loss for the current notional accounting period
- any unapplied calculated losses of previous notional accounting periods
- the FIF income that accrued to you. [section 618]
At the second tier
Where a first tier FIF has an interest in another FIF - a second tier FIF - you may elect to use the calculation method at the second tier. If you make that election, you must keep the same records for the second tier FIF that you keep for the first tier FIF. [section 618]
In addition, you may also need access to the underlying accounts and accounting records of the FIF. On audit, these may be called for to support your calculations.
Exempt in a previous year
Where your interest in a FIF was exempt in a previous income year and you elect to use the calculation method for the current year, keep details of the losses from any previous years which are to be offset against FIF income in the current income year.