Deemed Rate of Return Announced For Foreign Investment

  • Bill Birch

The new deemed rate of return used for the purpose of the Foreign Investment Fund regime has been set by regulation, Minister of Revenue Bill Birch announced today.

The rate for the 1997-98 income year has been set at 11.01%. The deemed rate of return for future income years will continue to be set annually.

The Foreign Investment Fund regime taxes the income earned by foreign entities on behalf of New Zealand residents, where the Controlled Foreign Company rules do not apply.

The deemed rate of return method is one of four methods for calculating Foreign Investment Fund income or loss.

The rate of 11.01% will apply to all types of investment, including interests in superannuation schemes and life insurance policies.