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Income Tax Act 2007

Timing and quantifying rules - Controlled foreign company and foreign investment fund rules - Attributing interests in FIFs

EX 40: Foreign exchange control exemption

You could also call this:

“Exemption for certain overseas investments affected by exchange controls”

You don’t have to count your rights in a Foreign Investment Fund (FIF) as an attributing interest in certain situations. This applies to you if you’re a natural person (not a company or organisation) and you got these rights before one of these things happened:

  1. You became a New Zealand resident for the first time
  2. A foreign country put exchange controls on you and your investment
  3. 8:00 pm New Zealand Standard Time on 2 July 1992

Also, for this rule to apply, there must be exchange controls that stop you from getting money from your rights or selling them for New Zealand dollars (or something you can easily change into New Zealand dollars).

This rule is part of the Income Tax Act 2007 and helps explain when you don’t have to worry about some overseas investments for tax purposes.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1515542.

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

EX 40Foreign exchange control exemption

  1. A person’s rights in a FIF are not an attributing interest if and to the extent to which—

  2. the person is a natural person; and
    1. the person acquired the rights—
      1. before first becoming a New Zealand resident; or
        1. before exchange controls applying to the person and the interest were imposed by a foreign country; or
          1. before 8.00 pm New Zealand Standard Time on 2 July 1992; and
          2. the exchange controls prevent the person from deriving amounts from the rights, or from disposing of the rights, in New Zealand dollars, or consideration that is readily convertible into New Zealand dollars.

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