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EX 31: Exemption for ASX-listed Australian companies
or “Australian companies on ASX exempt from certain foreign investment rules”
You could also call this:

“Australian unit trusts exempt from FIF rules if they meet turnover or distribution requirements”

You don’t have to worry about this rule if you have rights in a foreign investment fund (FIF) that meets certain conditions. These conditions are:

The FIF must be a unit trust that lives in Australia all the time. It can’t be treated as living in any other country under an agreement between Australia and that country.

The unit trust can’t be one of the special types listed in part B of schedule 25.

When the unit trust gives money to investors, there must be someone called an RWT proxy to handle the payments.

The unit trust must pass one of two tests:

  1. The 25% minimum share turnover test: This means the trust must have sold enough shares to make a good profit.

  2. The 70% minimum distribution test: This means the trust must have given out at least 70% of its gains to investors.

To figure out if the trust passes these tests, you need to do some maths using the trust’s financial information. All the calculations must be done using the same money type that the trust uses in its accounts.

If your FIF meets all these conditions, you don’t have to count it as an attributing interest, which means you might not have to pay tax on it.

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Next up: EX 33: Exemption for Australian regulated superannuation savings

or “Australian super savings may be exempt from NZ tax”
Next

Part E Timing and quantifying rules
Controlled foreign company and foreign investment fund rules: Attributing interests in FIFs

EX 32Exemption for Australian unit trusts with adequate turnover or distributions

  1. A person's rights in a FIF in an income year are not an attributing interest if—

  2. the rights are a direct income interest; and
    1. the FIF is a unit trust; and
      1. at all times in the year when the person holds a right in the unit trust, the unit trust is resident in Australia; and
        1. at all times in the year when the person holds a right in the unit trust, the unit trust is not treated as resident in a country other than Australia under an agreement that—
          1. is between Australia and that other country; and
            1. would be a double tax agreement if negotiated between New Zealand and that other country; and
            2. the unit trust is, at all times in the year, not an entity described in schedule 25, part B (Foreign investment funds); and
              1. at all times in the year when the unit trust makes a distribution to investors, there is an RWT proxy under section 124ZF of the Tax Administration Act 1994 for the unit trust and payments by the unit trust to the person; and
                1. for the trust's accounting year (the trust's year) that ends in the person's income year, the unit trust meets—
                  1. the 25% minimum share turnover test in subsection (2):
                    1. the 70% minimum distribution test in subsection (7).

                    2. The 25% minimum turnover test requires that, for the trust's year, the amount of total net realised gains calculated under subsection (3) must be 25% or more of the amount of total net unrealised gains at the end of the year calculated under subsection (5).

                    3. The amount of total net realised gains is calculated using the formula—

                      total disposal gain − total cost.

                      Where:

                      • In the formula in subsection (3),—

                      • total disposal gain is the total of amounts derived from disposal of shares by the unit trust during the trust's year:
                        1. total cost is the total cost to the unit trust of those shares.

                          1. The amount of total net unrealised gains is calculated using the formula—

                            total profitable shares − total cost.

                            Where:

                            • In the formula in subsection (5),—

                            • total profitable shares is the total of the market values of shares of the unit trust that are—
                              1. held at the end of the trust's year; and
                                1. have a market value greater than or equal to their cost to the unit trust:
                                2. total cost is the total cost to the unit trust of those shares.

                                  1. The 70% minimum distribution test requires that, for the trust's year, the total amount of distributions by the unit trust during the trust's year must be 70% or more of the total distributable gains for the trust's year calculated under subsection (8).

                                  2. The amount of total distributable gains is calculated using the formula—

                                    closing equity + distributions − opening equity − contributions.

                                    Where:

                                    • In the formula in subsection (8),—

                                    • closing equity is the amount by which, at the end of the trust's year, the market value of the unit trust's assets is more than the market value of the unit trust's liabilities:
                                      1. distributions is the total amount of distributions to investors by the unit trust during the trust's year:
                                        1. opening equity is the amount by which, at the beginning of the trust's year, the market value of the unit trust's assets is more than the market value of the unit trust's liabilities:
                                          1. contributions is the total amount of contributions by investors to the unit trust during the trust's year.

                                            1. The calculations must be done in the currency of the unit trust's financial accounts.

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                                            Notes
                                            • Section EX 32: substituted, on , by section 386 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).
                                            • Section EX 32(1)(f): amended, on , by section 293 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                                            • Section EX 32(9)(d): amended (with effect on 1 April 2008), on , by section 169(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).