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HM 2: What is a portfolio investment entity?
or “A portfolio investment entity is a company or fund that invests money for others and follows specific rules”
You could also call this:

“Rules for overseas investment entities similar to PIEs”

A foreign PIE equivalent is an entity that is not based in New Zealand. It can be a company or a superannuation scheme. To be considered a foreign PIE equivalent, the entity needs to follow certain rules about what it can invest in, where it gets its income from, and how much of each investment it can own. These rules are explained in sections HM 11 to HM 13.

The investors in a foreign PIE equivalent must meet specific criteria, which are outlined in section HM 14. There are also some limits on who can invest, which you can find in sections HM 21(1) and HM 22.

If any of the investors live in New Zealand, they have to follow extra rules about their investments. These rules are in section HM 15, with some additional limits in sections HM 21(2) to (4) and HM 22.

There’s also a special rule for trusts from Australia. If a trust is considered a managed investment trust under Australian tax law, it can be a foreign PIE equivalent as long as it’s not based in New Zealand.

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Next up: HM 4: Who is an investor?

or “This explains who counts as an investor in a Portfolio Investment Entity (PIE) or similar fund”
Next

Part H Taxation of certain entities
Portfolio investment entities: Introductory provisions

HM 3Foreign PIE equivalents

  1. A foreign PIE equivalent means an entity that—

  2. is not resident in New Zealand; and
    1. is—
      1. a company:
        1. a superannuation scheme; and
          2. meets the requirements relating to investment types, income sources, and maximum shareholding in investments in sections HM 11 to HM 13; and
            1. has investors that would qualify as an investor class under section HM 14 taking into account the limitations under sections HM 21(1) and HM 22; and
              1. if it has investors who are resident in New Zealand, those investors meet the requirements relating to investor interests in section HM 15 taking into account the limitations under sections HM 21(2) to (4) and HM 22.

                1. A trust that is, for Australian tax purposes, a managed investment trust under the Income Tax Assessment Act 1997 (Australia) is a foreign PIE equivalent if it meets the requirement in subsection (1)(a).

                Compare
                • s HL 5(1)
                Notes
                • Section HM 3: inserted, on (applying for the 2010–11 and later income years), by section 292(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                • Section HM 3(1) heading: inserted (with effect on 2 November 2012), on , by section 87(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                • Section HM 3(1)(b)(ii): amended (with effect on 29 March 2018), on , by section 146 of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                • Section HM 3(1)(b)(iii): repealed, on , by section 123(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section HM 3(1)(e): substituted (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 85(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                • Section HM 3(2) heading: inserted (with effect on 2 November 2012), on , by section 87(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                • Section HM 3(2): inserted (with effect on 2 November 2012), on , by section 87(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                • Section HM 3(2): amended (with effect on 2 November 2012), on , by section 140 of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                • Section HM 3 list of defined terms trustee: repealed, on , by section 123(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
                • Section HM 3 list of defined terms unit trust: repealed, on , by section 123(3) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).