November Tax Alert


User beware – Inland Revenue’s FIF calculator has not been calculating FDR income correctly

Tax Alert - November 2020

By Sam Mathews and Vicky Yen

The foreign investment fund (FIF) income calculator on Inland Revenue’s website has not been calculating FIF income under the fair dividend rate (FDR) annual method correctly. It looks like the issue began earlier this year when the FIF calculator was updated. We raised this with Inland Revenue and they agree that there appears to be an issue, as a consequence they have temporarily removed the calculator from their website.

The issue only appears to arise where there is a “quick sale”. A “quick sale” occurs where a FIF interest is bought and later sold in the same income year. For the FDR buffs, it is the “quick sale gain amount” in the FDR annual method calculation that is not calculating correctly.

There is obviously a risk where tax returns have been filed this year and the Inland Revenue FIF calculator has been used. Once the issue has been identified and the calculator fixed, we would expect some guidance from Inland Revenue on how to correct any previously filed positions without interest and penalties arising.

Deloitte has an internal FIF calculator that we often use to automate FIF calculations under the FDR annual method and the comparative value method, particularly where there are “quick sales”. This calculator can assist with the preparation of FIF calculations, including checking any calculations for returns filed in 2020 that were based on the Inland Revenue calculator.

Please contact your usual Deloitte adviser if you would like to discuss this issue, including how we can assist with any FIF calculations.

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