Income Tax Act 2007 section 809R

Section 809Q: composition of mixed fund

Section 809R sets out the rules for determining the composition of a mixed fund when an individual transfers money or property from that fund, particularly for the purposes of the remittance basis ordering rules in section 809Q.

• Property derived from an individual's income or capital is treated as still containing that income or capital, and debts settled using such income or capital can cause the related property to be treated similarly where just and reasonable
• An offshore transfer from a mixed fund is treated as carrying out a proportionate share of each type of income and capital in the fund, calculated by dividing the transfer value by the total fund value immediately before the transfer
• A transfer qualifies as an "offshore transfer" where neither the remittance basis ordering rules nor the TRF capital rules apply to it, or where it is reasonably estimated at the tax year end that those rules will not apply
• A "mixed fund" is money or property containing more than one category of income or capital, income or capital from more than one tax year, or a mixture of TRF capital and non-TRF capital; where multiple transfers are made, earlier transfers must be accounted for before analysing later ones