Making a foreign investment fund (FIF) disclosure
New tax rules for attributing interests in FIFs came into effect from 1 April 2007. The disclosure requirements were also reviewed, and have subsequently been issued as International Tax Disclosure Exemption ITR19.
Each year the requirements for making a FIF disclosure will be published in the May issue of the Tax Information Bulletin (TIB).
Note
If you use any of the following methods:
- deemed rate of return (DRR)
- accounting profits (AP), or
- branch equivalent (BE)
to calculate your FIF income or loss, then the disclosure requirements are unchanged from prior years.
The disclosure exemptions should remove the need for many investors to complete these forms. However, you are still required to declare any FIF income or loss in your tax return.
Cost method
If you use the new cost method to calculate your FIF income, you will need to complete and file the Interest in a foreign investment fund disclosure schedule (cost method) (IR449) . You will need to disclose the:
- name of the investment
- country of incorporation, organisation or registration (as appropriate)
- opening value of the investment in NZ$
- basis of the opening value.
FDR and CV methods
The disclosure requirements for the fair dividend rate (FDR) and comparative value (CV) methods vary depending on which group below you fall into.
Individuals and non-widely-held entities
That is, an individual trustee of a trust, a closely-held company or another entity not covered in the section below.
If your FIF investment is in a country that we do not hold a double tax agreement with as at 31 March 2008, and you use the new fair dividend rate or comparative value methods, then you will need to complete and file the relevant disclosure form(s), either:
- for the fair dividend rate - Interest in a foreign investment fund disclosure schedule for individuals and closely-held entities (fair dividend rate method) (IR447)
- for the comparative value method - Interest in a foreign investment fund disclosure schedule for individuals and closely-held entities (comparative value method) (IR448)
including the:
- name of the security
- stock exchange code - if known
- country of incorporation or tax residence
- opening market value at the beginning of your income year in NZ$.
Widely-held companies, widely-held superannuation funds, widely-held group investment funds, or portfolio investment entities (PIEs)
For each calculation method used, you must separately disclose the end-of-year market value of your investments split by the jurisdiction which the entity is incorporated, resident or managed in.
Alternatively, a split by the currency which the investment is held in will be accepted as a reasonable proxy, as long as it is at least 90-95% accurate for the underlying jurisdiction.
If your investments are denominated in euros you will need to split these into the underlying jurisdictions.
The disclosure forms for you to use are:
- IR445 for the fair dividend rate
- IR446 for the comparative value.
These forms are only available online - go to "Get it done online".
Date published: 17 Oct 2008
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