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Angela Thompson (Digital Marketing Manager) March 26, 2018 03:10

How to calculate your 2018 FIF income (NZ tax residents)

We've just published an article on "how to calculate your 2018 FIF income".

NOTES:

1) As of writing, the FIF list within Sharesight is in “draft” mode but we’ll review the list on 29 March to ensure we’ve picked up any changes that may have occurred in the last couple of months. Once we’ve finalised the list, we’ll remove the draft flag and update the article, as well as this thread.

2) We recommend double-checking your FIF-included companies against the IRD calculator. If you notice any holdings that are not automatically included/excluded by Sharesight, please leave a message below.
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  • David Olsen (Content Manager) March 29, 2018 03:46
    Update 29 March - we have updated the list of holdings and taken the FIF Report out of "draft" mode.

    We still recommend double-checking your FIF-included companies against the IRD calculator to be certain.
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  • Does your software accommodate other FIFs such as overseas managed funds?
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  • I’m Very disappointed and frustrated
    I went to do an FIF Report for the 2017/2018 year and found that every Australian share was excluded.
    On checking using the IRD's calculator I found that the following did not qualify under the Australian share exemption: LLC, MGR, SYD, TCL.
    I was very surprised by this result as all of these companies are on the ASX's web site list "Browse Top Companies" and I would have thought you would have picked them up in your checking.
    This tends to tell me that you have not in fact checked your list against the IRD's.
    If we are going to continue to sing your praises - you need to do better than that!
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  • Further to my earlier post, I checked the shares you show as "Exempt" in the example, in your article "how to calculate your 2018 FIF income", against the IRD calculator and found that all were exempt except for APT - which may or may not be.
    I have pasted in below the result from the IRD's calculator and from it you can see that it will depend on when the shares were purchased as to whether or not they are exempt.
    I put that share into a Test Portfolio and found that on entering it the share price only came up on 29/6/2017, which is the date it was listed, and the date exempt from - so OK there.
    Now I am thinking that there could be instances where there was a share that became exempt or became non-exempt at some date after purchase and I am wondering how Sharesight may handle it.
    Looking at the Sharesight list titled "Choose FIF included companies", maybe there should be a column headed "Exempt Status" and it to show say "from 29/06/2017" or "to 28/06/2017"
    Also that list should show your warning:
    "We recommend double-checking your FIF-included companies against the IRD calculator. If you notice any holdings that are not automatically included/excluded by Sharesight, please leave a message on our dedicated forum topic."
    because at present it gives the user a false sent of security.
    It would not be good for your reputation if the IRD discovered that Sharesight users were not correctly calculating their FIF income, because they relied on your pre-populated list and did not check it, and decided to check up on all your customers.

    Information entered: APT
    ASX Ticker Code APT
    Tax Period 1 April 2017 to 31 March 2018
    Result: APT

    The ASX Ticker Code you have entered relates to Afterpay Touch Group Ltd.

    Based on the information you have provided, the income from the shares qualifies under the Australian share exemption provided the shares were acquired on or after 29/06/2017

    This means income from the shares is taxed under the general income tax rules, the same as investments in New Zealand. They are not attributing interests for tax purposes and therefore fall outside the FIF rules.

    If the shares were acquired before 29/06/2017, the income from the shares does not qualify under the Australian share exemption.

    This means income from the shares will generally be taxed under the:
    fair dividend rate (FDR) method
    comparative value (CV) method
    cost method (CM)
    deemed rate of return (DRR)
    • Hi John,

      Thanks for pointing out the discrepancy with LLC, MGR, SYD, TCL. These are all actually stapled securities which IRD have determined do not qualify for FIF exemption (this is not clear cut from the legislation itself, but obviously it would be prudent to follow IRDs guidance on this).

      Unfortunately IRD have chosen not to publish a full list of exclusions this year (published as IR871 in previous years). As such we have calculated our exclusions by starting with the Reference Master List provided to us by ASX and applying various filters to determine the exemptions based on the legislation and available guidance notes from IRD. Following an investigation of the codes that you provided above, we have determined that some stapled securities were misleadingly classified as 'ordinary shares' in our ASX reference data and as such were not correctly removed from our list of exclusions. I have reviewed all known stapled securities on ASX and ensured that these are all now correctly removed from the list of exemptions that we maintain. I sincerely apologise for this error.

      Regarding the exemption date, this was primarily relevant under the old rules which stated that the shares needed to be listed on an approved index at the start of the year, or at the time of purchase if purchased during the year - the issue here being that the approved indexes were reviewed quarterly so it was quite possible for a share to exempt for only part of the year. With the recent change to the rules the 'approved index' criteria no longer applies and the shares simply need to be listed on ASX. So provided that the shares were trading on the ASX when you purchased them then you will naturally meet the date range criteria.

      Finally, we will take on board your feedback to link to the IRD tool from our FIF report. Although IRD also can not warrant that their list is free from error, they do state that investors who rely on it will be deemed to have taken "reasonable care" and not penalised based on any errors in their tool. It's also worth noting that IRD state "The list may not be exhaustive of the companies which qualify for exemption" In other words just because a company is not on the exemption list, this does not necessarily mean that it qualifies as a Foreign Investment Fund. This would be the case for listings classified as debt securities or derivatives for example.
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