How to calculate your FIF income

This morning the New Zealand Inland Revenue Department (IRD) announced their publication of the 2015 Australian Share Exemption list for Foreign Investment Fund (FIF) income reporting:


What is a foreign investment fund (FIF)?

As stated by the IRD, a foreign investment fund (FIF) is an offshore investment held by a New Zealand-resident taxpayer who holds:

  • less than 10% of the shares in a foreign company
  • less than 10% of the units in a foreign unit trust
  • between 10% and 40% of the shares in a foreign company which is not a CFC
  • an interest in a life insurance policy where a FIF is the insurer and the policy is not offered or entered into in New Zealand
  • an interest in a foreign superannuation scheme.
  • It does not include interest earned from term deposits, bonds, debentures or money lent.

Calculate your FIF income using Sharesight

Investors who have certain types of overseas investments may have foreign investment fund (FIF) income as a result. And while the IRD has a nifty little tool that lets you check if you are required to do anything under the FIF rules, if you determine that you do, the actual calculations can get quite tricky. That’s where Sharesight comes in. As an NZ Expert or Pro plan user, you can run your own FIF Income reports in just a few clicks, allowing you to:

  • Determine which of your holdings are subject to FIF (any holdings on the IRD 871 exclusion list are automatically excluded)
  • Calculate your ‘Peak holding balance’ so that you can determine whether you exceed the FIF threshold ($50,000 for individuals)
  • Calculate your FIF income under both the Fair Dividend Rate method and Comparative Value Method (Generally you are permitted to use either methodology, but check with your accountant if you are unsure as there are some exceptions to this)

FIF Income Report - Sharesight

Unless you’re a maths genius, we believe the hours of time you’ll save this tax season is more than worth upgrading to a Sharesight Expert or Pro plan! But don’t take our word for it – here’s what a couple Sharesight clients have to say about our FIF income reports:

I used the FIF reports for the first time and it greatly assisted the preparation of 2013/14 years tax returns. Sent copies of report to IRD with the returns and it was no problem. Well done Sharesight and well worth upgrading to include this reporting facility.”
Richard Maddren, Sharesight customer since 2008

We have been using this great app for several years. It makes it easy to review portfolio performance, keep track of income and manage those awful FIF calculations at tax time. The subscription is easily recovered in time savings at year end…”
Margaret Holmes, Sharesight customer since 2010

Sharesight goes global

Today we launch Sharesight International, a version of our platform to fulfil the demand we’re seeing from investors worldwide.

As more people gain access to more global investment options, they’re realising the need to track holdings from various markets, different brokers, different asset managers, and in different currencies.

Sharesight Goes Global

Sharesight International is different from our Australian and New Zealand localised editions. Investors can now select their home currency, choose from approximately 200 global share markets, and we’ve stripped away Aussie and Kiwi nuances. The paid plans will be billed in USD.

Soon user-driven capital gains tax reporting and an internationalised version of our taxable income report will be available. Our long term plan is to maintain a flexible, country-agnostic edition of Sharesight, while also building localised versions for big markets such as the US, the UK, and Canada.

The knock on our door to build a  flexible, non-local offering has been steadily growing for months. And because Sharesight was born in New Zealand, we’ve always understood the need to jump to new markets, which we did for Australia in 2011.

Sharesight Goes Global

To put this in perspective, New Zealand has a population of 4.5M, and the NZX is worth roughly $94B. Bill Gates’ could buy 53% of the entire market. Compare that to the US with a population of 319M and the NYSE and NASDAQ worth a combined $24.6T (that’s T for trillion). Furthermore, nearly 80% of our original Kiwi clients own overseas shares – they realised the overseas potential and so do we.

Our mission has always been to build a world-class portfolio application. We just happened to be from New Zealand.

It’s a big world out there. Time to renew our passports!

Vivid Sydney, Collaboration in Fintech, The Sunrise

We’ve spent a lot of money on dry cleaning over the past few weeks.

In late May and early June, we spoke at a Vivid Sydney event, presented at the Collaboration in Fintech conference, and attended The Sunrise, an event organised by Blackbird Ventures and Startmate.

Vivid Sydney

If you live in Sydney (or anywhere really) you ought to attend Vivid, which is a two week festival of art, ideas, music, and of course the famous light installations. We were invited to speak at a fintech event called Ideaction – a big thank you to the organiser Michelle Williams and the Tyro Fintech Hub for hosting.

The idea behind the event was to bring together key players in the burgeoning Australian Fintech space: the incubators, the banks, and the startups themselves. There were lots of good discussions and some honest (and sometimes) difficult questions for the presenters. I particularly enjoyed the back and forth over the role of banks and incubators in the financial start-up space.

Vivid Sydney Fintech Event - Michelle Williams

Michelle Williams – Ideaction

Vivid Sydney Fintech Event - Chris Brycki

Chris Brycki – Stockspot

I spoke about the challenges of running a fintech start-up and shared an observation that’s been dogging me for awhile: there’s an awful lot of smoke when it comes to Aussie Fintech, but I find it can be a peculiarly lonely place.

The local firms that are actually putting out world-class software and apps are rare. Most of the time we’re busy getting on with the job at hand. It seems to me that if you have to stop and explain the medium (fintech), then you’re probably doing it wrong.

We were asked to leave the audience with a provocative question. Mine: Can Australia overcome the tall poppy syndrome so that we can foster a truly word-class technology company in the same sphere as say, Facebook?

Vivid Fintech Event - Doug Morris

Collaboration in Fintech

A very punchy event with heavy hitters from banking and government. Kudos to the Criterion people for putting on a top-notch day. The sessions were useful and the networking was high calibre.

Sharesight was invited to participate in the “pitch pit,” a competition in which fintech start-ups gave a rapid fire 5 minute presentation. The start-ups included Stocklight, Hashching, Simply Wall Street, Money Buddy, Moroku, and

I actually gave a live demo (always risky on stage with hotel wi-fi!) and while I felt that my preso was strong, hats off to the winner, Jason from Stocklight.

Collaboration in Fintech - Doug Morris

The Sunrise

As far as I’m concerned The Sunrise is the best tech conference in Australia. The guys from Startmate and Blackbird Ventures bring in some big time people, both from local companies and from overseas – and aspiring students building cutting edge tech.

Just go to the link above to watch the videos, I really can’t do the event more justice than that.

Steve Baxter from Pipe Networks was awesome, but my favourite session was a live, collaborative piano jam by none other than Simon Tedeschi.

The Sunrise

mFund from ASX Roadshow

Recently we were invited to present at a roadshow put on by the ASX focussing on mFund. The goal was to educate DIY investors on mFund in general and highlight the benefits of diversification.

mFund by ASX - Ian Irvine

We showed off how to track and report on mFunds in Sharesight, whilst a number of well-known fund managers talked about their global strategies.

mFund by ASX - Doug Morris

If you don’t know what an mFund is, you should educate yourself now. We believe take-up will be significant to the point of mFund becoming an industry mainstay.

Today there are around 100 funds available from high calibre managers such as AMP, Schroders, PIMCO, and Legg Mason. This means that via online brokers, such as CMC Markets, you can buy and sell managed funds online just as you would a few shares of BHP. This is possible. Today.

mFund by ASX - Doug Morris

Enter Sharesight. As investors add mFund to their portfolios, they need a way to administer, track, and report on them. And since mFund by their very nature are not available on platforms and wraps, Sharesight is the ideal solution.

mFund take-up is growing steadily – we’re seeing this first-hand inside Sharesight portfolios. This is a major win for DIY investors and financial advisers.

mFund by ASX - Doug Morris

DIY Investors

For retail investors (like me) mFund opens up a whole new world of active management. What used to be professional-only ($1M minimum) strategies such as fixed interest, emerging markets, infrastructure, and small caps are all now just one click away.

Yes, ETFs can give you similar exposure, but if you wanted active management then you had to pay a middleman. For the portfolios on Sharesight, we see significant exposures to overseas markets and non-traditional asset classes – but – a significant portion of that money is sitting in passive structures.

Plus, there’s virtually no paperwork involved since the units are held by ASX CHESS. I recall first moving to Australia and trying (and failing) to invest a small amount of money in a fund online. I was shocked that in the land of compulsory superannuation there was no way to buy a fund online!

We expect mFund (alongside ETFs) to form the bedrock of SMSF portfolios.

Financial Advisers

Every time we sit down with financial planners (usually IFAs), we hear the same two things:

One, they’re moving clients off platforms. If the only reason a client’s assets are sitting on a platform is for on-going admin and reporting, then that client’s money is being wasted. Advisers know this. So they’re searching for alternatives like Sharesight. Access to managed funds used to be a valid reason for keeping a client on a platform, but with the introduction of mFund + Sharesight that no longer holds true.

Two, they’re looking for a flexible advice model. Some clients need end-to-end financial advice, some are self-directed but need guidance, and some are totally DIY, save for a little bit of “tuck pointing” on an annual basis.

Since mFund are available to both the adviser and his clients, the adviser is no longer forced to act as the asset-gatekeeper. An investment strategy can be driven by the professional, the client, or by both. This way the advisers’ interests are totally aligned with their clients.

Access to certain asset types and the software used to track portfolios used to justify the tolls we had to pay. Fortunately for our bottom lines that’s begun to change.

mFund by ASX - Doug Morris

Note: ASX will be hosting a similar event for financial advisers in July. Stay tuned to our blog and Twitter feed for details.

Global stock markets available on Sharesight

Today we’re pleased to announce that more global stock markets are available on Sharesight! We’ve made a significant investment in our data platform (and your Sharesight account) for two reasons:

  • To satisfy the growing international appetite of investors in our original markets
  • To pave the way for our imminent launch in overseas markets

Sharesight now provides historical & daily prices, dividends, and corporate actions on approximately 200 overseas markets.

Sharesight supports 200 global stock markets

To kick things off, we’ve added some of the most popular new markets to your Sharesight account. Just login and add a new holding. In the Market dropdown menu you’ll see options for the Euronext, the three Canadian exchanges, and the Hong Kong stock exchange.

Sharesight International Markets

We’re on standby and have more markets ready to be deployed – and we’ll do so based on client demand. If you’d like to access an exchange, please navigate to the Help tab within Sharesight to get in touch or post on our customer forum.

Finally, Sharesight will convert price and dividend data back to your portfolio’s local currency so no need to worry about exchange rates.

Don’t Forget Your Passport

Back to our first point above, home country bias has plagued retail investors for years, especially in countries with deep capital markets like the US and Australia. But that’s beginning to change as investors demand exposure to global sharemarkets – and we’re seeing demand for a multitude of global stock markets. Most notably northern Asia and Europe, alongside Canada.

Studies show that American investors are hopelessly skewed towards their own backyard, but they’re lucky – many American companies derive the bulk of their revenues from overseas, and most large international firms are listed on US domestic markets anyway, thereby giving the American investor a fairly diversified portfolio.

Now, if you’re an Aussie investor, chances are you’re well aware of your (over?) exposure to banks and resources. But to date the average retail investor hasn’t had a choice short of ridiculous $100 overseas trading fees. The huge growth in ETF inflows is partly a result of investors seeking overseas exposure. Even it if they’re passive, ETFs are cheap are exchange traded.

Fortunately, overseas brokers and product providers are flooding Australia – and we’re definitely seeing the effects at Sharesight.

Today, nearly 20% of our Australian-based portfolios contain overseas shares and a full 75% of Kiwi investors own overseas companies (a big chunk are ASX companies to be sure, with BHP being the 10th most popular holding by New Zealand-based investors).

For example, you can now trade international shares on CMC Markets or Saxo Capital Markets for as little as 2 cents per share.

Tech companies gravitate towards old-school industries with fat margins. Just as fintech companies are disrupting the payments industry, we expect foreign online brokers to do the same for international brokerage. Bring it on!