FIF Calculators

How This Works

Since we can't know future investment returns for certain, this calculator estimates your likely FIF tax obligations based on probabilities. Here's the breakdown:

• Two Tax Methods: FIF rules generally let you choose the lower tax calculated by two methods:
  • Fair Dividend Rate (FDR): A simple 5% tax on the investment's opening market value.
  • Comparative Value (CV): Tax on the actual capital gain plus dividends received (but capped, usually at 5% of the opening value).
• Estimating Returns: We use your inputs (Expected Return, Volatility) to model a range of possible future returns using a standard financial model (lognormal distribution). High volatility means a wider range of possibilities.
• Calculating Expected Tax: The calculator simulates thousands of possible return scenarios based on the model. For each scenario, it calculates the tax using the 'lower of FDR or CV' rule. The final "Expected FIF Tax Rate" is the average tax rate across all these simulated scenarios, weighted by how likely each scenario is.
• Net vs. Gross Return: The "Gross Expected Return" is your input. The "Net Expected Return" is simply the Gross Return minus the calculated Expected FIF Tax Rate.

This approach provides a more realistic estimate than just assuming a single return outcome, especially for volatile investments. Learn more about calculating FIF income.