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Income Tax Act 2007

Taxation of certain entities - Portfolio investment entities - Introductory provisions

HM 31: Rules for multi-rate PIEs

You could also call this:

“How multi-rate PIEs handle taxes and investor payments”

You need to follow specific rules if you’re a multi-rate PIE (Portfolio Investment Entity). You must give income from investments to investors and pay tax based on their tax rates. You can find more details about this in sections HM 34 to HM 40.

You have to work out and pay your tax, and you can choose when to do this. Look at sections HM 41 to HM 47 for more information on this.

You need to change how much investors own in your entity or how much you give out to them to show the tax you’ve paid. Section HM 48 explains this more.

You can use tax credits to pay your tax. Sometimes, you might have extra credits left over. If this happens, you can give these to some investors by changing how much they own or receive, like we talked about earlier. Sections HM 49 to HM 55 tell you more about this.

If you’re dealing with foreign investors in foreign investment PIEs, there are special rules. You can find these in several sections, including HM 2(4), HM 33, and others.

There are also rules about how you can choose to work out and pay your tax, what tax rates to use for investors, and when investors can leave. You can read about these in sections HM 56 to HM 63.

If you want to know how multi-rate PIEs can use losses, look at sections HM 64 to HM 70.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2888774.

Topics:
Money and consumer rights > Taxes
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HM 30: When foreign PIE equivalent no longer meets requirements, or

“Rules for when a foreign investment loses its PIE-like status”

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HM 32: Rules for and treatment of investors in multi-rate PIEs, or

“How to pay tax on your multi-rate PIE investments”

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

HM 31Rules for multi-rate PIEs

  1. A multi-rate PIE must—

  2. attribute income arising from the proceeds of an investment to an investor, and pay tax on the income based on the investor's tax rates, see sections HM 34 to HM 40:
    1. calculate and pay its tax liability, choosing certain periods to do this, see sections HM 41 to HM 47:
      1. adjust investor interests of investors in the entity or distributions from the entity to reflect an amount of tax paid, see section HM 48:
        1. use tax credits received to satisfy the entity’s tax liability, in some cases providing any surplus credits to certain investors by making an adjustment described in paragraph (c), see sections HM 49 to HM 55.

          1. For the provisions relating to the treatment of notified foreign investors in foreign investment PIEs, see sections HM 2(4), HM 33, HM 35C, HM 44B, HM 47(2B), (4), and (6), HM 51, HM 53, HM 55C to HM 55H, HM 60, HM 61(2), HM 64(4), and HM 65(5).

          2. For the provisions relating to the options available to a multi-rate PIE for calculating and paying its tax liability, prescribed and notified investor rates for investors, and exit levels and periods, see sections HM 56 to HM 63.

          3. For the provisions relating to the use of losses by multi-rate PIEs, see sections HM 64 to HM 70.

          Notes
          • Section HM 31: 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 31(1)(a): amended, on , by section 66(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
          • Section HM 31(1)(c): amended (with effect on 1 April 2010), on , by section 93 of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
          • Section HM 31(1B) heading: inserted, on , by section 66(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
          • Section HM 31(1B): inserted, on , by section 66(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
          • Section HM 31 list of defined terms foreign investment PIE: inserted, on , by section 66(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
          • Section HM 31 list of defined terms notified foreign investor: inserted, on , by section 66(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).