FIF Tax Regime - Any Spreadsheets?

[shasta]

For the record, IRD accepted my tax return as self-assessed with attached copy of my spreadsheet and covering letter.

I modified the front "summary" sheet from earlier versions to match the data boxes on the tax return which makes more sense.

Thats what i've always done too, the IRD either accepts it, or hasn't got the resources to investigate it further. (Costs of doing so are prohibitive)

I doubt they know enough to challenge it

[Steve]

From the IRD (to let us know that they are on to it!):

FIF disclosure forms
The online electronic service for the new foreign investment fund (FIF)
disclosure forms - the IR 445, IR 446, IR 447, IR 448 and IR 449 - is
currently under development. This service won't be ready in time for 30
June Portfolio Investment Entity (PIE) IR 853 and 7 July 2008 IR 3 return
filers.

If you need to file by 7 July, please go to www.ird.govt.nz, print out PDFs
of the forms, and file them manually. The PDFs for IR 447, IR 448 and IR
449 will be available by Friday 20th June. A generic spreadsheet will also
be available. While the spreadsheet is designed for PIEs for the IR 445
and IR 446 all investors can use it to meet their disclosure requirements
for the fair dividend rate (FDR), comparative value (CV) and cost
methods.

We expect the electronic service to go live end of August 2008.

[Toulouse - Luzern]

Hi

My understanding is if you kept within the FIF $50K cost threshhold when you bought several years ago even if the value on 1/4/07 is $150K that you are not liable for 5% on the $150K.

This paragraph from the ird confirms that understanding:

This deemed disposition and reacquisition applies only for transitional purposes and, in particular, it does not set a new cost basis for the purposes of the $50,000 minimum threshold for application of the foreign investment fund rules in sections CQ 5 and DN 6. The original cost basis applies for the purposes of the $50,000 threshold.

Comments anyone.

Thanks



Context:

Transitional rules: values at which offshore interests enter the new rules (section EX 54b)
All investments which become subject for the first time to the new foreign investment fund rules enter the new rules at their market value on the start date of the new tax rules. For most individuals this will be 1 April 2007.

This entry into the new rules at market value is achieved under section EX 54B(2) by a deemed disposition and reacquisition of the interests at their market value on the start date of the new foreign investment fund rules for the investor. This deemed disposition and reacquisition applies only for transitional purposes and, in particular, it does not set a new cost basis for the purposes of the $50,000 minimum threshold for application of the foreign investment fund rules in sections CQ 5 and DN 6. The original cost basis applies for the purposes of the $50,000 threshold.

A person who holds their investments on revenue account, such as a managed fund, and which becomes subject to the new foreign investment fund rules may have a resultant tax liability because of the deemed disposition and reacquisition under section EX 54B(2). This liability can spread over three years beginning with the first year of application of the new foreign investment fund rules. At least one-third of this tax liability must be paid in the first year, half of the balance paid in the second year and the remaining balance paid in the third year (section EX 54B(3)(a)).

A person who has a tax liability because of the deemed disposition and reacquisition under section EX 54B is not liable to pay any penalty or interest for an inaccuracy in an estimate, or shortfall in the payment, of provisional tax if the inaccuracy or shortfall arises because of the deemed disposal (section EX 54B(3)(b)).

[Toulouse - Luzern]

Hi,

After puzzling away with the IRD web site stuff the answer is:

A NZ$50,000 minimum threshold applies to an individual's investments in foreign companies other than Australian-resident listed companies. If the original cost of these shares totals NZ$50,000 or less, the foreign investment fund rules do not apply to the individual.

The stuff I posted as context covers new investments:
All investments which become subject for the first time to the new foreign investment fund rules enter the new rules at their market value on the start date of the new tax rules. For most individuals this will be 1 April 2007.

[777]

Disclosure is only required for interests held in FIFs that are foreign companies incorporated in, or FIFs that are not foreign companies
that are tax resident in, countries that we did not hold a Double Tax Agreement (DTA) with on 31 March 2008. A list of the countries
that we hold DTAs with can be found on www.taxpolicy.ird.govt.nz/international/DTA/


By the above copied straight off IR447 it would indicate that no disclosure is required for Australian held investments. This of course does not mean you don't have to conform to the FDR regime, just that you don't have to disclose anything.

Maybe I'm a bit thick..

[777]

A TIB with updated info from IRD.

http://www.ird.govt.nz/resources/fil...b-vol20no4.pdf

[voltage]

i purchased some stock a long time ago and my record keeping has not been good especially when a number of purchases made for same company shares.
What would I do in this case? The other way is to workout the value on 30 March 2007. How do I find share values for that date? This way has the disadvantage of pushing me over the thresh hold.

[777]

i purchased some stock a long time ago and my record keeping has not been good especially when a number of purchases made for same company shares.
What would I do in this case? The other way is to workout the value on 30 March 2007. How do I find share values for that date? This way has the disadvantage of pushing me over the thresh hold.

Firstly you should have done this valuation at the time. You can get the share value from 1/4/07 newspapers at a local library. Remember also that the option at that date was I think 50% of current market value if you did not have records of your purchases. Check this out on the IRD site.

Remember July 7th for filing tax return.

[Lizard]

My attention has just been brought to what may turn out to be a simpler/cost-effective solution to FIF calculation.

http://www.fifcalculator.co.nz/

Not sure how far along with development they are - might not be a solution for current year, but could save some work in future. I've been told prices suggested were quite reasonable.

[Ish]

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..