Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

International Tax > FIFs > Flashcards

FIFs Flashcards

1
Q

What exemption is there for FIF interests for natural persons?

A

There is an exemption from FIF interests for natural persons where the costs of those interests doesn’t exceed $50,000.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Other than an exemption for shares in Australian ASX listed companies, what other Australian exemptions are there?

A

Exemptions for certain Australian unit trusts and superannuation funds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

What exemptions from FIF requirements are there with respect to CFCs?

A

Exemptions from FIF requirements where there is an income interest of more than 10%.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

What exemptions are there from FIFs for direct interests in Australian companies?

A

There is an exemption were there is a direct income interest of more than 10%.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

If an exemption applies from the FIF rules, what applies with respect to NZ income tax?

A

The general tax rules apply.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

What are the implications of the general tax rules applying to taxpayers exempt from the FIF rules?

A

Dividends received and gains from the disposal of FIF interests held on revenue account will be taxable.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

How is income calculated under the fair dividend method?

A

5% of the market value of the FIF interest at the start of the year (+quick value adjustment?)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What is the default method for FIF calculation?

A

Fair dividend rate

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

In what instances will the fair dividend method of FIF calculation not be applied?

A

Where the investment is a non-ordinary share, it is not practical to use this method (typically because of difficulties with market valuation). Or another available calculation method is chosen.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

How is income calculated under the comparative value method?

A

The year’s total return (dividends and capital appreciation) s FIF income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Who is the comparative value method mandatory for?

A

Non ordinary shares.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Who may use the comparative value method if they choose?

A

Natural persons and family trusts.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

How is FIF income calculated under the cost method?

A

5% of the cost of the FIF interest (uplifted by 5% per annum) is FIF income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

How is FIF income calculated under the deemed rate of return method?

A

A prescribed rate of return is FIF income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Who is required to use the deemed rate of return FIF method?

A

Non-ordinary shares whose market value cannot be ascertained.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

How is FIF income calculated under the attributable FIF income method?

A

Passive income is treated as FIF income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Who is the attributable FIF income method available to?

A

Only where the FIF interest is at least 10% and not a non-attributing active FIF (unless taxation under FIF rules is chosen).

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

When can a taxpayer in a non-attributing active FIF apply the attributable FIF income method?

A

When taxation under FIF rules is chosen.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Where taxation is applied under the FIF rules, is there also separate taxation of dividends and gains on disposal?

A

Not generally, no.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Are FIF interests required to be disclosed?

A

Yes, under section 61 of the TAA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Under what section of the TAA are disclosures of FIF interests required?

A

Section 61

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Can the Commissioner grant an exemption to FIF disclosure requirements?

A

Yes, under section 61(2) of the TAA.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Under what section of the TAA is the Commissioner able to grant an exemption to disclosing under the FIF rules?

A

Section 61(2)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

What is the first type of resident taxpayer exempted from disclosing FIFs under the 2016 International tax disclosure exemption ITR27 from being required to disclose?

A

Taxpayers with an interest of less than 10% in a foreign company if it is not an attributing interest in a FIF or if it falls within the $50,000 de minimis exemption.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

What is the second type of taxpayer exempted under the 2016 International tax disclosure exemption ITR27 from being required to disclose?

A

If the resident is not a widely-held entity, an attributing interest in a FIF that is an income interest of less than 10%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

If the second type of taxpayer exemption from disclosing FIFs applies under the 2016 International tax disclosure exemption ITR27 where must the entity be resident?

A

The FIF must be from an entity incorporated or otherwise resident in a tax treaty country or territory.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

For the second type of taxpayer exemption from disclosing FIFs applies under the 2016 International tax disclosure exemption ITR27 what FIF calculation method must be used?

A

Either the fair dividend or the Comparative Value FIF calculation methods.

28
Q

What is the third type of taxpayer exempted from disclosing FIFs under the 2016 International tax disclosure exemption ITR27 from being required to disclose?

A

Widely held companies with an attributing interest of 10% or less.

29
Q

For the third type of taxpayer exemption applies under the 2016 International tax disclosure exemption ITR27 what FIF calculation method must be used?

A

Either the fair dividend or the Comparative Value FIF calculation methods.

30
Q

For the third type of taxpayer exempted from disclosing FIFs under the 2016 International tax disclosure exemption ITR27 what must they disclose instead?

A

The end-of-year New Zealand dollar market value of all such investments split by the jurisdiction in which the attributing interest in a FIF is held or listed.

31
Q

What is an attributing interest under the TAA?

A

A direct income interest such as shares in a foreign company or units in a unit trust.

32
Q

How is the natural person $50,000 threshold calculated for the purposes of the FIF rules?

A

A natural person is exempt from the FIF rules if the total costs of all FIF interests is not more than $50,000.

33
Q

When calculating whether the $50,000 threshold for FIFs applies based on total costs of FIF interests, are for example ASX listed shareholdings taken into account?

A

No because interests such as ASX listed shareholdings are not FIF interests.

34
Q

Why might there be a year’s grace if the $50,000 threshold is exceeded by purchases after the start of the income year?

A

Because there would be insufficient FIF interests at the start of the income year for the purposes of the fair dividend rate method and the cost method.

35
Q

If the natural person $50,000 threshold is exceeded, is it exceeded for all FIFs or just those in excess of the threshold?

A

All FIFs

36
Q

Does the natural person $50,000 threshold for exemption from the FIF riles apply to natural persons acting in their capacity as trustees?

A

No

37
Q

Can the natural person $50,000 threshold be disregarded by taxpayers on the basis that the FIF rules apply despite having attributing interests costing less than $50,000?

A

Yes

38
Q

Does the exemption from the FIF rules for shares held in an ASX-listed Australian companies, apply to stapled stock?

A

No

39
Q

Other than being resident in Australia and not treated as being resident in a country other than Australia under a DTA, what else is required for the exemption from the FIF rules to apply?

A

The Australian company is required to maintain an Australian franking account and are Australian listed companies.

40
Q

What is the exemption published by the Commissioner of companies exempt from the FIF rules because of being ASX-listed Australian companies?

A

IR 871

41
Q

What is the requirement for the exemption in certain Australian unit trusts?

A

The trust must meet a minimum turnover of 25% or satisfy a 70% distribution test and the investors must elect to use the RWT proxy mechanism for their investment in the entity.

42
Q

What are the requirements for an exemption for Australian superannuation schemes?

A

Generally the scheme has to be subject to strict preservation rules whereby the benefits are locked in until the member reaches retirement age.

43
Q

What does an attributing interest in a FIF not include with respect to CFCs?

A

An attributing interest in a FIF does not include an income interest of 10% or more in a CFC.

44
Q

What is the FIF exemption for an attributing interest of 10% or more in a FIF resident and subject to tax in Australia?

A

This exemption exists where the taxpayer is not a PIE, superannuation scheme, unit trust, life insurer or group investment fund. In addition, the FIF must not be subject to an exemption for offshore business income or a special allowance or exemption for offshore banking units.

45
Q

What exemptions apply to grey list companies?

A

Shares in a grey list company that has migrated out of New Zealand but has retained considerable presence in New Zealand though a fixed establishment;
Shares in a grey list company that has taken over a New Zealand company and continues to have considerable presence in New Zealand;
Share or option to buy shares, in a grey list company first acquired by a person under a venture investment agreement at the same time and on the same terms as when the Venture Investment Fund acquired shares in the FIF.
Shares in a grey list company held under an employee share plan where there are restrictions on the ability of the investor to sell the shares.

46
Q

What exemption exists from being required to return FIF income where there are foreign exchange controls?

A

There is an exemption for an interest held by a natural person in a foreign entity located in a country where exchange controls prevent the person from deriving income in New Zealand currency or realising the income in New Zealand currency.

47
Q

What FIF exemptions are there for death benefits in life insurance policies purchased overseas?

A

There are FIF exemptions for certain death benefits in life insurance contracts purchased when the person was an overseas resident or entered into before 2 July 1992.

48
Q

The main category of FIF comprise _________________, although similarly categorised is a foreign life insurance

MTG

A

shares in a foreign company

49
Q

The main category of FIF comprise shares in a foreign company, although similarly categorised is a _______________, and an entity listed in sch 25 pt A (currently no entities listed).
MTG

A

foreign life insurance policy

50
Q

The main category of FIF comprise shares in a foreign company, although similarly categorised is a foreign life insurance policy, and an ____________ pt A (currently no entities listed).
MTG

A

entity listed in sch 25

51
Q

The main category of FIF comprise shares in a foreign company, although similarly categorised is a foreign life insurance policy, and an entity listed in sch 25 pt A (_______________________).
MTG

A

currently no entities listed

52
Q

Do the FIF rules apply to units in a foreign unit trust?

A

Yes

53
Q

Limited $50,000 minimum threshold for particular trusts

  1. The $50,000 threshold applies to the following small range of trusts: (a) The trust of the estate of a deceased person: the threshold applies for the first _____________ after the person’s death.
    http: //www.davidco.co.nz/dl/FIFsConferencePaperApril2012.pdf
A

5 years

54
Q

Limited $50,000 minimum threshold for particular trusts

  1. The $50,000 threshold applies to the following small range of trusts: (a) The trust of the estate of a deceased person: the threshold applies for the first 5 years after the _______________.
    http: //www.davidco.co.nz/dl/FIFsConferencePaperApril2012.pdf
A

the person’s death

55
Q

The $50,000 minimum threshold for FIFs takes into account _____________ if these form part of the cost of acquiring any shares.
http://www.davidco.co.nz/dl/FIFsPaper.pdf

A

brokerage fees

56
Q

The $50,000 minimum threshold for FIFs takes into account brokerage fees if these form part of the cost of _________________.
http://www.davidco.co.nz/dl/FIFsPaper.pdf

A

acquiring any shares

57
Q

Under section ______e and ____ 5 of the ITA, the $50,000 threshold applies if the income year begins on or before the day that is 5 years after the person’s death.

A

CQ 5

58
Q

Under section CQ 5 1e and CQ 5 5 of the ITA, the ____________ applies if the income year begins on or before the day that is 5 years after the person’s death.

A

$50,000 threshold

59
Q

Under section CQ 5 1e and CQ 5 5 of the ITA, the $50,000 threshold applies if the income year begins ______________________________.

A

on or before the day that is 5 years after the person’s death

60
Q

Under section ___________, a person is treated as not deriving FIF income to the extent to which the income arises solely from receiving a death benefit under a life insurance policy.

A

EX 45

61
Q

Under section EX 45, a person is __________________ to the extent to which the income arises solely from receiving a death benefit under a life insurance policy.

A

treated as not deriving FIF income

62
Q

Under section EX 45, a person is treated as not deriving FIF income _________________ from receiving a death benefit under a life insurance policy.

A

to the extent to which the income arises solely

63
Q

Under section EX 45, a person is treated as not deriving FIF income to the extent to which the income arises solely ____________________ under a life insurance policy.

A

from receiving a death benefit

64
Q

Under section EX 45, a person is treated as not deriving FIF income to the extent to which the income arises solely from receiving a death benefit _________________.

A

under a life insurance policy

65
Q

In what section of the ITA are non-ordinary shares defined?

A

EX 46

International Tax (6 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions