Foreign investment funds are a type of offshore investment with special tax rules.
A foreign investment fund (FIF) is an offshore investment that is:
- a foreign company
- a foreign unit trust
- a foreign superannuation scheme
- an insurer under a foreign life insurance policy.
Calculating foreign investment fund income
FIF income is attributed to an investor. This may mean an investor has FIF income before actually getting any money.
There are various exemptions from the FIF rules. If no exemptions apply, you should work out FIF income under one of these methods:
- fair dividend rate (FDR) method
- comparative value (CV)
- cost method (CM)
- deemed rate of return (DRR)
- attributable FIF income method.
You can read more about the DRR and attributable FIF income methods in our Guide to foreign investment funds - IR461.
Disclosing a foreign investment fund interest
In many situations you must disclose your FIF interest. To do this you will need a few details:
- the name of the investment
- the country of incorporation or tax residence
- the market value in New Zealand dollars at the beginning or end of your income year.
There are a number of exemptions from the FIF rules which may mean that you do not need to disclose your FIF interests. When you do need to disclose them, you can do this in your tax return.