Two Australian exemptions could apply dependent on your interest in the FIF.
- portfolio interest (under 10% interest) in an FIF
- non-portfolio interest (10% or greater interest) in an FIF (for income years starting on or after 1 July 2011)
When you hold shares in a company that:
- is listed on an approved index such as the ASX All Ordinaries
- is Australian-resident (and not treated as resident in another country under an agreement between Australia and that other country)
- maintains a franking account, and
- the shares are not stapled stock
the shares are exempt from being an attributing interest in a FIF. Where these shares are held on capital account, the only income to be returned is the dividend income.
If your dividends are franked (ie, have Australian franking credits attached) this tells you that the company is Australian resident. Your dividend advice slip should show if your dividend is a franked dividend. However, some companies may still be Australian resident, but for whatever reason, may not be able to pay out dividends with franking credits attached. If they otherwise qualify, these shares are exempt from being an attributing interest in a FIF.
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List of companies that qualify for the exemption
To assist investors in determining whether or not an Australian company
satisfies the exemption criteria, we will provide a list of companies from the ASX All Ordinaries index, which we consider qualify for the exemption from the FIF rules.
You can find the current Australian share exemption list (IR871) under "Work it out" on the right hand side of this page.
Investors with the standard balance date will be able to rely on the list and treat the investment as subject to tax under the general rules. Accordingly, we will treat any investor who relies on the list as having taken reasonable care in taking that tax position and will not be subject to any shortfall penalty if the shortfall arises from errors in our list.
When the list is available
The list of exempt companies will be issued as soon as practicable following the end of the tax year on 31 March.
Investors will be able to rely on the list, if they:
- own shares in the company on 1 April in that income year, or
- first acquire a share during the income year while the company is still on the All Ordinaries index, or
- first acquire a share in a company that has been added to the list during the year on or after the add date, or
- do not hold a share after the date that it no longer meets the residence or no-stapling criteria. (this date will be noted on the list)