FIF Exemption List - NZ tax payers

[Lizard]

Recently I thought I heard something on the RNZ business clip that the FIF exemption list will be expanded to cover all listed Australian shares and not just those within the All Ords (generally).

I've been hunting around, but can't locate anything more about this. Just starting to set up my tax tracking for 2017/18 year, so it would be good to know.

Anyone able to clarify this (or point me to another ST thread if I've missed it)? TIA

[777]

This old article does refer to what seems to be going to happen

http://www.stuff.co.nz/southland-times/business/78448898/Taxing-Times-No-compliance-costs-for-us-we-re-the-IRD


I can't see any changes on the IRD site. It will be interesting to see if they produce an IR871 list this year.

[Kaspar]

I hope that includes the ETF's as well. I always thought it was ridiculous that an ETF made up of Australian shares like VAS or IOZ is not FIF exempt.

[Lizard]

Thanks for that 777. Good to know I wasn't just dreaming it! But, yes, disappointing that the IRD hasn't put anything on its web-site in advance of the tax year, so we could ensure we kept the correct records!

[macduffy]

Thanks for raising this, Lizard. And welcome back to the forum!

:)

[kura]

If it's not on IRD website, I openly wonder if it's "Fake News"

Disc: would sure make my record keeping a lot simpler if it's true !

[DarkHorse]

Thanks for starting this thread Lizard. First time ever doing taxes early this year :) (due to upcoming family pressures with wife's ECE course).

I did a bit of sleuthing around online...quite a mystery! Searching in the "Income Tax Act 2007" shows no change. But I found reference to the legislation in question in a Deloittes memo - the elegantly named: "Taxation (Transformation: First Phase Simplification and Other Measures) Bill", which dates from mid-2015 and covers a raft of tax issues. Drilling down, here's the relevant section of the subsequent Act: http://www.legislation.govt.nz/act/public/2016/0027/latest/DLM6516047.html

The upshot is YES the all ASX listed companies will be exempt - BUT not until the 2017-18 tax year.

[Lizard]

Thanks DarkHorse - good to have that confirmation!

[morphs]

So, I presume that means that all ASX listed ETFs will also be exempt from FIF, which is good news. Australian LICs (investment trusts) are already exempt. Does that mean that NZX listed investment trusts (e.g. JMO) are subject to FIF, but those on the ASX are not?

[morphs]

Just had another look ....there is still a need that the ASX company maintains a franking account so the ASX ETFs may not be exempt after all :-(

[Xerof]

I found this in a KPMG article, which backs up what has been said so far. Pity the IRD haven't made it easy to find on their website, but I guess their 2018 calculator will turn up in due course. Last year I think it was about early July, leaving less than a week to complete that part of the tax return so it could be filed on time.


Australian listed share exemptionFrom 1 April 2017, the exemption from the Foreign Investment Fund rules for certain Australian listed shares – Australian resident companies on the ASX All Ordinaries index – will be extended to all shares listed on the ASX.
The exemption also requires consideration of whether the share is in a “company” (as defined for Australian tax purposes), tax resident in Australia, and excludes stapled securities. Therefore, care will need to be taken when applying this wider exemption.

[DarkHorse]

I think you're right Xerof.
Basically any asx listed stock that shows franking credits is exempt from the FIF rules from 1.4.17, except for stapled securities. For verification see the Income Tax Act and IRD website:
http://www.legislation.govt.nz/act/public/2007/0097/latest/DLM1515516.html#DLM1515516
http://www.ird.govt.nz/toii/fif/how-taxed/how-tax-exemption/toii-fif-how-taxed-other-exemptions.html

To double check a company, see the IRD's "2017 and later" super user-friendly tool :t_up: at http://www.ird.govt.nz/calculators/tool-name/tools-a/aus-share-exemption-calc-2017.html (it seems to be uptodate but I wouldn't guarantee it)

[Xerof]

Yes it is now up to date, just plug in the most recent tax year and check all your shares. All my shares are now exempt, except one which is registered in Bermuda, no NO MORE FIF returns for me. YAY

[ratkin]

It is about time they upped the 50k limit, been stuck there for years. 100k would be more appropriate, or better still get rid of it all together for anything listed in oz

[younga]

I got shares in Nab and it pays 99 cents dividends per share. Does this exemption mean I don't have to pay tax on my dividends?

[blackcap]

I got shares in Nab and it pays 99 cents dividends per share. Does this exemption mean I don't have to pay tax on my dividends?

No it means you are exempt from FIF rules. You still pay tax on your NAB dividend. Ie that 99 cents has to be declared under foreign income or dividends.