FIF/FDR Tax Regime on Overseas Investments

FIF/FDR Tax Regime on Overseas Investments.

If you are liable to this tax regime (Your adviser will have told you, and your tax report will have a section with calculations on it as shown below), it is IMPORTANT that you read this guidance.

How does FIF/FDR and the exemption work?

If you have less than $50,000 per person cost price of overseas investments (for Moneyworks clients this is generally Australian Dollar denominated investments, like Magellan, Platinum etc), then you have an exemption from the FIF/FDR tax regime and you pay tax on your Overseas income received.  This is taken out of your portfolio during the year as the dividends or interest is paid.

If you have more than $50,000 per person cost price of overseas investments at ANY time, you will fall under the FIF/FDR regime.

If you invest through a Trust or Company you do not have an exemption and you are liable to the FIF/FDR regime.

How FIF/FDR is taxed

Normally, you will pay tax at your marginal tax rate, on the Fair Dividend Amount (5.00% of the value of the portfolio as at 01/04 each year).  This is instead of paying tax on your Overseas Dividend Income.  Your tax is payable at the end of each year, and is not deducted during the year.

If your portfolio has had losses in the financial year from 01/04/2019 to 31/03/2020 (as many portfolios will, as the bottom of the international markets (to date) was 23/03/2020, then you do not have to pay any tax on your Overseas Income.

In your Tax Report you will receive several different calculations of the tax payable – as illustrated below. You can elect which tax obligation to pay – normally you would select the lower tax liability.


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