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Income Tax Act 2007

Memorandum accounts - Branch equivalent tax accounts (BETA) - Introductory provisions

OE 5: Treatment of attributed CFC income and FIF income in this subpart

You could also call this:

“How overseas investment fund income is treated for tax purposes”

When you have an interest in a foreign investment fund (FIF), the government treats the income from that fund in a special way for tax purposes. If you’re not a company, here’s what you need to know:

Your FIF income is treated as if it came from a controlled foreign company (CFC) if it’s calculated using specific methods. These methods are called the attributable FIF income method or other methods mentioned in section EX 50(6) or section EX 58 of the Income Tax Act.

In this situation, the government pretends that your FIF is actually a CFC. They also consider your interest in the FIF as an income interest. This means the rules that apply to CFCs will also apply to your FIF income.

This treatment helps the government apply tax rules consistently to different types of foreign investments.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1519189.

Topics:
Money and consumer rights > Taxes
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“When a company is no longer classified as a BETA company”

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OE 6: BETA payment of income tax on foreign income, or

“Discontinued method for paying tax on overseas income”

Part O Memorandum accounts
Branch equivalent tax accounts (BETA): Introductory provisions

OE 5Treatment of attributed CFC income and FIF income in this subpart

  1. For the purposes of applying this subpart to a person, other than a company, with an attributing interest in a foreign investment fund (FIF),—

  2. FIF income derived from the person's interest is treated as attributed CFC income if the FIF income is calculated—
    1. under the attributable FIF income method:
      1. under a method to which section EX 50(6) or EX 58 (which relate to the calculation of FIF income) applies; and
      2. the FIF is treated as a CFC; and
        1. the interest in the FIF is treated as an income interest.

          Notes
          • Section OE 5: replaced, on (applying for income years beginning on or after that date), by section 103(1) of the Taxation (International Investment and Remedial Matters) Act 2012 (2012 No 34).