Foreign income return form guide 2020

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Chapter 4 Taxation of foreign investment fund (FIF) interests

Overview

This chapter explains the tax treatment of Australian residents when they receive distributions from a FIF (foreign investment fund), or dispose of their interests in a FIF, if they had previously been subject to accruals taxation on their FIF interest.

The FIF measures have been repealed and do not apply to taxpayers from the 2010-11 income year. Further details of the FIF measures in earlier income years are provided in the FIF Guide for those years.

The FIF measures applied to income and gains accumulating in foreign companies that were not controlled by Australians and foreign trusts that, broadly speaking, fell outside the scope of the deemed present entitlement and transferor trust measures. The FIF measures also applied when working out the income of controlled foreign companies (CFCs) with FIF interests, and to certain foreign life policies (FLPs) that had an investment component, such as life bonds.

Taxpayers are no longer subject to accruals taxation on income and gains accumulating in FIFs. As FIF income is no longer attributable, any unapplied previous FIF losses cannot be used to reduce future FIF income.

If you have an interest in a FIF, you will be subject to the tax rules applicable to your circumstances: for example, if you have an interest in a foreign trust, you will be subject to the general tax rules relating to trust income (Division 6 of Part III) and may be subject to the transferor trust provisions (Division 6AAA of Part III). For more information, see Chapter 2 of this guide.

If you have an interest in a foreign company to which the CFC measures do not apply, you will be subject to the general tax rules relating to dividend income and shares.

For more information about the former FIF measures, see chapter 4 of Foreign income return form guide 2017.

See also:

• You and your shares 2020 .

ATO references:
NO 51231-2