As a PIE fund, one of the key benefits of investing with Kernel is that we handle all the complex tax administration for you. You do not need to worry about Foreign Investment Fund (FIF) rules or declare any income from the fund in your personal tax return.
Here’s a simple breakdown of how it works:
1. Dividends are Received by the Fund
When the 100 companies within the fund pay dividends, that cash is paid directly into the fund itself, not to your personal bank account. This income contributes to the fund's overall value and is automatically reinvested.
2. We Calculate the Fund's Total Taxable Income
After the end of the tax year, we calculate the fund's total taxable income. This includes:
Standard Dividend Income: From the majority of the Australian companies held in the fund.
Income Under FIF Rules: For a small number of holdings that are not exempt from FIF rules (for example, companies that are foreign-incorporated or are stapled securities), we perform the required FIF calculations to determine their taxable income.
All sources of income are combined to get one total taxable income figure for the fund.
3. Your PIE Tax is Calculated and Paid
We apply your Prescribed Investor Rate (PIR) to your portion of the fund's total taxable income. This determines the amount of tax you owe, which Kernel pays directly to the IRD on your behalf.
What This Means For You:
You don't need to perform any complex FIF calculations. We identify the non-exempt shares and manage the tax accordingly.
The PIE tax is a final tax. You do not need to declare dividends or any other income from the fund in your personal tax return.
Your only responsibility is to ensure we have your correct PIR on file. We take care of the rest, making your investment tax simple and straightforward.