FIF Fair Dividend Rate (FDR) Worksheet

The FIF Fair Dividend Rate (FDR) Worksheet is part of the FIF Report available within Sharesight. It provides details of the data and calculations required to work out taxable income under the FDR method.

Note: This report is only available in New Zealand tax residency portfolios on Expert and Sharesight Pro plans.

Income Calculation

This section gives a breakdown of the taxable income for a share (excluding quick sales) which is calculated at 5% of the opening value of a share.

Quick Sale Adjustment

If applicable, this section calculates the quick sale adjustment using both the peak holding method and the quick sale gains method. The choice of which method is used depends on which method produces the overall lowest figure across all shares in the portfolio.

Peak Holding Gain Method

The peak holding gain is calculated using the formula: 5% x quick sales x average cost. The “quick sales” amount in the peak holding adjustment formula is the lower of:

• the difference between the greatest number of shares held in the foreign company during the income year and the number of shares held in the foreign company at the start of the income year; and
• the difference between the greatest number of shares held in the foreign company during the income year and the number of shares held in the foreign company at the end of the income year.

The “average cost” component in the peak holding adjustment formula is the amount of expenditure that the shareholder incurs during the income year in acquiring or increasing their shareholding in a foreign company divided by the total number of shares acquired in the foreign company during the income year. Using the average cost approach takes account of the situation when different parcels of shares in the same company are purchased during the year at different prices. The table shows each buy or sell for the share during the period. The opening balance is printed above the table. The calculations below use information derived from the table to work out the quick sale adjustment using the Peak Holding Gain method.

Quick Sale Gains Method

The quick sale gain is calculated by taking the total amount derived from quick sales (including any dividends) and subtracting the total expenditure incurred in acquiring the shares that were sold. A last-in-first-out (LIFO) method applies to determine the gains made on quick sales. The quick sale gain cannot be less than zero, i.e. if the calculation yields a negative amount it cannot be netted off the total balance if this is positive. The table shows a line item for each quick sale, with the information required to calculate the total amount derived from quick sales (including any dividends).

In the case where the shares sold are deducted from more than one previous buy transaction, a separate line item is shown for each component of the trade. Total brokerage (both buy and sell) incurred as a result of quick sale trades is summed below the table, brokerage reduces the amount of income derived from quick sale gains and is therefore deducted as part of the quick sale gains calculation below.

Last modified on June 8, 2023 UTC