A type of interest in a foreign investment fund for which a person may not use the fair dividend rate method (Dimensional Trusts - Global Bond Sustainability Trust NZD Class).
Tax Information Bulletin Vol 34 No 1 - February 2022
Discussion (which does not form part of the determination)
Scope of determination
This determination is issued on the basis of information provided to the Commissioner before the date of this determination and applies to an attributing interest in a FIF held by New Zealand resident investors in a non-resident issuer where:
- The non-resident issuer:
- Is an Australian Registered Managed Investment Scheme;
- Is known at the date of this determination as the Dimensional Trusts – Global Bond Sustainability Trust;
- Invests in financial arrangements including domestic and global fixed interest and money market securities; and
- Is operated with separate classes of units.
- The attributing interest consists of the New Zealand dollar denominated class of units issued in the Dimensional Trusts - Global Bond Sustainability Trust, a class of units that provides an interest in the underlying assets of the fund that predominantly (i.e. 80% or more by value at a time in the income year) consist of financial arrangements such as international fixed interest securities; and
- The investment interest attributable to the New Zealand dollar denominated class of units are subject to currency hedging arrangements undertaken by the non-resident issuer for the purpose of eliminating exchange rate risk for New Zealand investors on a highly effective basis.
In this determination, unless the context otherwise requires-
“Fair dividend rate method” means the fair dividend rate method under section YA 1 of the Income Tax Act 2007.
"Financial arrangement" means financial arrangement under section EW 3 of the Income Tax Act 2007.
“Foreign investment fund” means foreign investment fund under section YA 1 of the Income Tax Act 2007.
"New Zealand resident" means a person that is resident in New Zealand for the purposes of the Income Tax Act 2007; and
"Non-resident" means a person that is not resident in New Zealand for the purposes of the Income Tax Act 2007.
An attributing interest in a FIF to which this determination applies is a type of attributing interest for which a person may not use the FDR method to calculate FIF income from the interest.
This determination applies for the 2022 income year and subsequent income years.
However, under section 91AAO(3B) of the Tax Administration Act 1994, this determination does not apply for a person and an income year beginning before the date of the determination unless the person chooses that the determination applies for the income year.
Dated on this 15th day of December 2021
Team Leader, Legal Services