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Income Tax Act 2007

Taxation of certain entities - Portfolio investment entities - Exceptions

HM 21: Exceptions for certain investors

You could also call this:

“Special rules allow certain investors to exceed investment limits”

You don’t need to worry about having a minimum number of investors if at least one of your investors is on a special list or if the only money they make is tax-free because it’s for charity.

If you’re a special kind of investor or if all your money is tax-free because it’s for charity, you can invest more than the usual limit.

There’s a special rule for some investors in a type of investment called a listed PIE. If you’ve owned between 20% and 40% of the investments since 17 May 2006, you can keep owning that much even though it’s more than the usual limit.

Sometimes, the rules care about whether investors are connected to each other. But if either the connected person or the investor is on the special list, you don’t need to worry about that rule.

Remember, the special list of investors is called schedule 29, and the rules about tax-free charity money are in section CW 41 or CW 42.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2888748.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Savings and retirement
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HM 20: Re-entering as PIE: 5-year rule, or

“You must wait 5 years to become a PIE again after losing PIE status”

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HM 22: Exceptions for certain funds, or

“Certain funds and investors are exempt from specific portfolio investment entity rules”

Part H Taxation of certain entities
Portfolio investment entities: Exceptions

HM 21Exceptions for certain investors

  1. The rule for a minimum number of investors in section HM 14(1) does not apply if—

  2. an investor class of the entity includes at least 1 investor listed in schedule 29, part A (Portfolio investment entities: listed investors):
    1. the only income that the investor derives is exempt income under section CW 41 or CW 42 (which relate to charities).

      1. The rule for maximum investor interests in section HM 15(1) does not apply if the investor is—

      2. listed in schedule 29, part A or B:
        1. a person whose only income is exempt income under section CW 41 or CW 42.

          1. Repealed

          2. Section HM 15 does not apply in the case of an investor in a listed PIE, other than an investor listed in schedule 29, parts A and B, that holds more than 20% but less than 40% of the total interests in the investor class and held more than 20% and less than 40% of the total interests at all times from 17 May 2006 to the relevant time.

          3. Section HM 16 does not apply if either the associated person or the investor is an investor listed in schedule 29, parts A and B.

          Compare
          • ss HL 6(4), HL 9
          Notes
          • Section HM 21: 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 21(1): substituted, on , by section 64(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
          • Section HM 21(2) heading: amended (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 90(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
          • Section HM 21(2): substituted, on , by section 64(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
          • Section HM 21(3) heading: repealed (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), pursuant to section 90(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
          • Section HM 21(3): repealed (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 90(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
          • Section HM 21 list of defined terms exempt income: inserted, on , by section 64(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
          • Section HM 21 list of defined terms income: inserted, on , by section 64(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).