02 Jun 11
Foreign Accumulation Fund rules
The ATO has outlined its administrative treatment of the proposed Foreign Accumulation Fund (FAF) rules pending the enactment of the necessary legislation.
The Foreign Accumulation Fund (FAF) rules are a specifically targeted, narrowly defined anti-avoidance provision for portfolio investments of Australian residents in foreign accumulation or roll-up funds. When enacted, the FAF rules will have retrospective effect from 1 July 2010.
The ATO will accept tax returns as lodged during the period up until the proposed law change is passed by Parliament. Past year assessments will not be reviewed until the outcome of the proposed amendment is known.
After the new law is enacted, taxpayers will need to review their position for the income year commencing 1 July 2011.
Those taxpayers who returned income in accordance with the changes do not need to do anything more.
- Those taxpayers who returned more income than they were required to can seek an amendment and if a reduction in liability results, interest on overpayment will be paid.
- Those taxpayers who returned less income than required by the changes will need to seek amendments. No tax shortfall penalties will be applied and any interest accrued will be remitted to the base interest rate up to the date of enactment of the law change. In addition, any interest in excess of the base rate accruing after the date of enactment will be remitted where taxpayers actively seek to amend assessments within a reasonable timeframe after enactment.
For more information go here