Relationship with other provisions in Act

EX 59 Codes: comparative value method, deemed rate of return method, fair dividend rate method, and cost method
When this section applies

(1)

This section applies when a person has an attributing interest in a FIF and calculates their FIF income or loss from the interest for a period using—

(a)

the comparative value method:

(b)

the deemed rate of return method:

(c)

the fair dividend rate method:

(d)

the cost method.

Exclusion for interests in FIFs resident in Australia

(1B)

Subsection (1)(c) does not apply if the person’s interest in the company is included, at the beginning of the income year in which the payment is made, in a direct income interest of 10% or more in a FIF that, at the beginning of the income year,—

(a)

meets the requirements of section EX 35(b)(i) to (iii); and

(b)

does not have its liability for income tax reduced by an exemption, allowance, or relief referred to in section EX 35(c)(i) or (ii).

Application of rule for certain managed funds

(1C)

Subsection (1B) does not apply if—

(a)

the person is a portfolio investment entity, an entity eligible to be a portfolio investment entity, or a life insurance company; and

(b)

the FIF is a foreign PIE equivalent.

No income other than FIF income

(2)

The person is treated as not having any income from the interest for the period other than FIF income and, in particular, any dividends derived in the period from the interest and any income gained from disposing of the interest in the period are disregarded.

Exception to subsection (2): fees rebate

(2B)

An amount derived by the person from the interest is not disregarded under subsection (2) if—

(a)

the amount is a rebate of fees; and

(b)

the person was allowed a deduction for the payment of the fees.

No deductions other than FIF loss

(3)

The person is denied a deduction for any amount incurred in the period on acquiring some or all of the interest, except to the extent to which the amount is taken into account under the relevant calculation method in calculating FIF income or loss for the period.

Application of trading stock rules

(4)

The interest is not trading stock in the period and accordingly subpart EB (Valuation of trading stock (including dealer’s livestock)) does not apply.

Defined in this Act: amount, attributing interest, calculation method, company, comparative value method, cost method, deduction, deemed rate of return method, direct income interest, dividend, fair dividend rate method, FIF, FIF income, FIF loss, foreign PIE equivalent, income, life insurance, loss, portfolio investment entity, trading stock

Compare: 2004 No 35 s EX 47

Section EX 59(1)(c): substituted (with effect on 1 April 2008), on 6 October 2009, by section 181(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59(1B) heading: replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 40(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).

Section EX 59(1B): replaced (with effect on 1 July 2011 and applying for income years beginning on or after that date), on 7 May 2012, by section 40(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).

Section EX 59(1C) heading: inserted (with effect on 1 April 2008), on 6 October 2009, by section 181(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59(1C): inserted (with effect on 1 April 2008), on 6 October 2009, by section 181(2) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59(1C)(b): substituted, on 1 April 2010 (applying for the 2010–11 and later income years), by section 181(3) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59(2B) heading: inserted (with effect on 1 April 2009), on 6 October 2009, by section 181(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59(2B): inserted (with effect on 1 April 2009), on 6 October 2009, by section 181(4) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59 list of defined terms company: inserted (with effect on 1 April 2008), on 6 October 2009, by section 181(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59 list of defined terms direct income interest: inserted (with effect on 1 April 2008), on 6 October 2009, by section 181(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59 list of defined terms foreign investment vehicle: repealed, on 1 April 2010, by section 181(6)(a) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59 list of defined terms foreign PIE equivalent: inserted, on 1 April 2010, by section 181(6)(b) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59 list of defined terms grey list company: repealed (with effect on 1 July 2011), on 7 May 2012, by section 40(2) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).

Section EX 59 list of defined terms life insurance: inserted (with effect on 1 April 2008), on 6 October 2009, by section 181(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).

Section EX 59 list of defined terms portfolio investment entity: inserted (with effect on 1 April 2008), on 6 October 2009, by section 181(5) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).