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HM 34: Attribution periods
or “Choosing how often a multi-rate PIE assigns amounts to investors”
You could also call this:

“How to work out net and taxable amounts for investor classes in multi-rate PIEs”

This section explains how to calculate the net amounts and taxable amounts for an investor class in a multi-rate PIE (Portfolio Investment Entity) for an attribution period. You use a formula to work out the net amount: assessable income minus deductions. Assessable income includes the PIE’s income and tax credits for the class, but not supplementary dividends. Deductions are the PIE’s allowed expenses related to earning that income.

If the result is positive, it’s net income. If it’s negative, it’s a net loss. To find the taxable amount, you use another formula: net income minus net loss minus other loss used. ‘Other loss used’ is the smaller of either formation loss and land loss, or the total net income.

If this result is positive, it’s taxable income. If it’s negative, it’s a tax loss. The PIE allocates income and deductions to investors and classes based on how it values investor interests, its financial statements, or using a special method for financial arrangements.

You can find more information about formation loss in sections HM 66 to HM 70 and about land loss in section HM 65.

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Next up: HM 35B: Treatment of certain provisions made by multi-rate PIEs

or “How multi-rate PIEs can include future income and costs in their calculations”
Next

Part H Taxation of certain entities
Portfolio investment entities: Attributing income to investors

HM 35Determining net amounts and taxable amounts

  1. This section applies for the purposes of a calculation under section HM 36(2).

  2. The net amount for an investor class of a multi-rate PIE for an attribution period is calculated using the formula—

    assessable income − deductions.

    Where:

    • In the formula in subsection (2),—

    • assessable income is the total amount of the PIE's assessable income attributed to the class for the attribution period in the manner referred to in subsection (8), including any tax credits received for the income but not including the amount of any supplementary dividends:
      1. deductions is the total amount of the PIE’s expenditure or loss for which the PIE is allowed a deduction that is—
        1. incurred by the PIE in deriving the assessable income referred to in paragraph (a); and
          1. attributed to the class for the attribution period.

          2. If the result of the formula is positive, the amount is net income of the class for the period. If the result of the formula is negative, the amount is a net loss of the class for the period.

          3. The taxable amount for an investor class of a multi-rate PIE for an attribution period is calculated using the formula—

            net income − net loss − other loss used.

            Where:

            • In the formula in subsection (5),—

            • net income is the amount of the PIE’s net income referred to in subsection (4):
              1. net loss is the amount of the PIE’s net loss referred to in subsection (4):
                1. other loss used is the lesser of the following amounts:
                  1. the total amount for the class of formation loss that is attributable for the attribution period under sections HM 66 to HM 70 and any amount of land loss under section HM 65 that has not been used for an earlier period:
                    1. the total amount of net income referred to in paragraph (a).

                    2. If the result of the formula is positive, the amount is taxable income of the class for the period. If the result of the formula is negative, the amount is a tax loss of the class for the period.

                    3. Income and deductions of the multi-rate PIE are allocated to investors and investor classes for attribution periods as—

                    4. reflected in the PIE's valuation of investor interests, if the PIE makes these valuations and paragraph (c) does not apply to the income and deductions:
                      1. shown in the PIE's financial statements, if the PIE does not makes the valuations referred to in paragraph (a) and paragraph (c) does not apply to the income and deductions:
                        1. given by Determination G27: Swaps, Method C, if the income and deductions arise from a financial arrangement that meets the requirements for the method and the multi-rate PIE, before becoming a party to the financial arrangement, chooses to use the method for the income and deductions from such financial arrangements and does not revoke the choice.

                          Compare
                          • ss EG 3, HL 19, HL 20
                          Notes
                          • Section HM 35: 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 35(3)(a): substituted (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 94(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                          • Section HM 35(3)(a): amended, on (applying for the 2013–14 and later income years), by section 99(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
                          • Section HM 35(8)(a): amended, on , by section 80(1) (and see section 80(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                          • Section HM 35(8)(a): amended (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 94(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
                          • Section HM 35(8)(b): amended, on , by section 80(2) (and see section 80(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).
                          • Section HM 35(8)(c): inserted, on , by section 80(3) (and see section 80(4) for application) of the Taxation (Annual Rates for 2022–23, Platform Economy, and Remedial Matters) Act 2023 (2023 No 5).