Commonwealth Consolidated Acts

INCOME TAX ASSESSMENT ACT 1936 - SECT 469

             (1)  This Part applies to a taxpayer who has an interest or interests in what is referred to in this Part as a foreign investment fund ( FIF ). That expression refers to certain non‑resident companies and non‑resident trusts.

             (2)  This Part also applies to a taxpayer who has an interest in a foreign life assurance policy ( FLP ). That expression refers to certain life assurance policies issued by a non‑resident. A taxpayer is regarded as having an interest in a FLP if, and only if, the taxpayer has the legal title to the FLP.

             (3)  The object of this Part is to include in a taxpayer's assessable income of a year of income an amount ( foreign investment fund income ) that represents income attributable to an interest or interests in a FIF or a FLP held by the taxpayer during the accounting period ( notional accounting period ) of the FIF or FLP that ends in that year of income.

             (4)  The provision of this Act ( the operative provision ) that includes foreign investment fund income in a taxpayer's assessable income is section 529, which is contained in Division 16.

             (5)  The operative provision does not apply, or its application is affected, in certain circumstances which are set out in:

                     (a)  Divisions 2 to 15 of this Part; and

                     (b)  section 768‑965 of the Income Tax Assessment Act 1997 .

             (6)  Division 18 contains the provisions for determining whether any foreign investment fund income accrued from a FIF or a FLP to a taxpayer in respect of a notional accounting period.

There are 3 methods provided for making a determination in respect of a FIF. These are called:

                     (a)  the market value method;

                     (b)  the deemed rate of return method;

                     (c)  the calculation method.

The method available to the taxpayer in respect of a particular notional accounting period of a FIF generally depends on the level of detailed information that the taxpayer has about the FIF's income and on the method used by the taxpayer to determine whether foreign investment fund income accrued from that FIF in previous notional accounting periods.

There are 2 methods provided for making a determination in respect of a FLP. These are called:

                     (d)  the deemed rate of return method;

                     (e)  the cash surrender value method.

             (7)  Division 19 provides for the keeping of accounts to avoid double taxation in respect of interests in FIFs or FLPs.

             (9)  Division 21 contains provisions that apply in certain circumstances if an interest in a FIF or a FLP is disposed of.

           (10)  Division 22 provides for the keeping of records relating to interests in FIFs and FLPs.