FIF Tax Regime - Any Spreadsheets?

[voltage]

yes we will all be using the FDR method this year since most shares have rebounded. I cannot imagine IRD will be checking calculations, after ringing them they seem very confused about the whole situation of taxing global income.

[tobo]

The New Zealand IRD871 document is a complete list of ASX codes showing exactly on what date a particular share is added to or leaves the ASX. <snip>
SNOOPY

That document is named "Aus share exemption list"
It actually appears to record arrival/departure to/from AllOrds, but, because of it's name, can we assume that they have checked that the company is Aus resident AND it maintains a franking account and therefore can be relied on?
I'm sure it can be relied on (otherwise what's the point of having the list, which, I am sure, IRD staff also rely on).

The only annoyance is it's not usually made available until several weeks/months after 31 March,
So I have to simply look at the ASX/S&P list in March if I were making a purchase/sale decision that might be impacted by a company's AllOrds arrival or departure

[tobo]

quote from IRD website:
Example 3
Platinum Asset Management (PTM) was added to the index on 20 March 2008. If you acquired shares in PTM before that date you will not qualify for the FIF exemption. However, if you first acquired shares in PTM after 19 March 2008 you will qualify for the exemption.

If already owned, and then the share becomes an AllOrd = NOT Exempted.
If share becomes an All Ord before you first buy = Exempted

But what is the significance of the word "first" buy?
What if I owned a share, then it becomes an AllOrd during year, and then I sell it later the same year. (As stated above, this gets the quick sale treatment...although I would never have realised based on my reading the IRD).
My question is, suppose the FOLLOWING year after holding zero for a while, I then buy some again. This is not the first time I have had shares in this company, but I would have expected that this is a separate holding is independent of the other one, and that this holding would be exempt because the shares were in the All Ords when I bought it (this time.)

Maybe they are just using the word 'first' in relation to adding to your holding in a company.

Or do they mean once you've held shares in a small cap, and sold out, if you buy back in after it becomes an All Ord, it will still not be exempt for you?

[I know what my opinion/interpretation is, but what makes sense to me is not always what the rules are.]
I imagine this affects traders more than investors, but occaissionally circumstances will see an investor selling out, and some time later investing in the company again, whether because of changed risk perception, or personal cashflow needs.

I'd be grateful if anyone knows this curly one...

----ToBo

[Alpine]

Scanned through the thread and saw some people were having problems but not sure if all of them have been resolved.

I am involved in this area and can help if people need it.

Agreed that it is a reasonably complex area of tax law..

Hi Ish - I don't know if you can help me or are able. I am sure the answer is simple to those who have been there! Having spent hours looking through the IRD website and looking through this forum I think I have a fairly good grasp of the FIF laws as they apply to me. One thing that I can't get my head around is that I had a Macquarie CMT account in the last financial year (I have an extension of time with my return) and from everything I read it appears that I must use the CV method for all my Australian investments because the IRD has made a determination about using this method for the CMT account. Arguably I could have $10 interest from my CMT account and still be required to use the CV method rather than the FDR method which seems contrary to the intention of the law change. Someone posted here that the Macquarie CMT a/c was now exempt from the FIF laws but from what I can make out they would need to have an RWT proxy - and I don't understand them to have that. Are you able to point me in the right direction? I am sure plenty of others have been in the same situation. Thanks

[tobo]

I posted a question in April last year.
No-one answered.
At the time I held BOW which subseqently became exempt (through joining All Ords and getting on IRD's list).
I sold BOW and have not later bought any, so did not need the answer to my question to do last years tax return.

This question has come up again on the PEN thread.

It also reminds me of another FIF question. I keep seeing people saying FIF applies to both traders and investors.
I do not see that.
I think traders pay tax on their actual gains (and claim deductions against other income for losses) on the basis that it is business activity with the intention of making profit.
Therefore don't need to get into the mire of clumsy FIF calulations.
[Perhaps it actually amounts to the same thing and i just didn't realise.]

Discl: I have both an investment holding and a trading acc, which I keep COMPLETELY separate.
Both have non-All Ord australian shares.

[Aaron]

To revisit an old question.

How do traders as quickly as possible calculate their FIF income when trading US shares. With multiple trades per year what is the quickest way to calculate this.

The peak holding method can sometimes throw up quite a different result to the actual gain.

[Aaron]

For example if you are buying and selling the same companies shares throughout the year the peak holding calculation is a lot less than the actual gain based on the FDR calculations. Or am I doing that wrong.

Effectively you are calculating a profit figure based on the peak number of shares at any one time during the year and ignoring the many profits made during the year as you continue to buy and sell.

This is confirmed by the IRD calculator.

Probably discussed endlessly somewhere else. Very time consuming though so would be interested in ideas to speed the processing up. You need to enter each transaction individually, as an average over the whole year throws up a wrong figure.

[SBQ]

For example if you are buying and selling the same companies shares throughout the year the peak holding calculation is a lot less than the actual gain based on the FDR calculations. Or am I doing that wrong.

Effectively you are calculating a profit figure based on the peak number of shares at any one time during the year and ignoring the many profits made during the year as you continue to buy and sell.

This is confirmed by the IRD calculator.

Probably discussed endlessly somewhere else. Very time consuming though so would be interested in ideas to speed the processing up. You need to enter each transaction individually, as an average over the whole year throws up a wrong figure.

From my gatherings with different accountants in the past, IRD is not very sticky when it comes to doing FIF around the 'Quick Sale' method, that is trying to be 100% accurate. What really matters is what the starting balance is at April 1st, and what the ending balance is at March 31st in the following year. You can do all the trades you want on the same stock, if it amounts to meaningful gains, then this WILL add to the portfolio balance. Of course one could lose it all in the weeks before end of March (ie Covid crash March 2020).

[Aaron]

From my gatherings with different accountants in the past, IRD is not very sticky when it comes to doing FIF around the 'Quick Sale' method, that is trying to be 100% accurate. What really matters is what the starting balance is at April 1st, and what the ending balance is at March 31st in the following year. You can do all the trades you want on the same stock, if it amounts to meaningful gains, then this WILL add to the portfolio balance. Of course one could lose it all in the weeks before end of March (ie Covid crash March 2020).

I think your advice might be a bit off. For an investor whose portfolio does not change much that might be sort of right but if you buy and sell a share in the same year you need to complete a "quick sale adjustment" calculation, long term investor or short term trader. Probably what the accountants are saying it is so complicated IRD doesn't have the time to check anyones calculations.

[FTG]

I think your advice might be a bit off. For an investor whose portfolio does not change much that might be sort of right but if you buy and sell a share in the same year you need to complete a "quick sale adjustment" calculation, long term investor or short term trader. Probably what the accountants are saying it is so complicated IRD doesn't have the time to check anyones calculations.

Aaron; if you are a deliberate and active trader, then there is no requirement under the tax legislation to operate under the FIF regime.
Moreover, I would imagine a (successful) trader would not be highly motivated to elect to do so, especially when the alternative is far simpler, transparent & tidier from a compliance perspective.