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Income Tax Act 2007

Taxation of certain entities - Portfolio investment entities - Attributing income to investors

HM 36: Calculating amounts attributed to investors

You could also call this:

“How your share of a PIE's income or loss is calculated”

When you invest in a multi-rate PIE (Portfolio Investment Entity), the amount of income or loss attributed to you for a year is worked out using a special formula. This calculation is done for each period within the year, for each day in that period, and for each investor class you’re part of.

The formula looks at your share of the PIE’s income or loss for the day. It takes into account how much of the PIE’s income you’re entitled to, as well as any fees or expenses related to your investment.

Here’s a breakdown of what goes into the calculation:

Your percentage share of the PIE’s income for the day The PIE’s taxable income for the period Any tax losses the PIE has for the period The number of days in the period Any fees you pay for management or administration of your investment Any of your expenses that have been transferred to the PIE Any credits for fees that the PIE has given you

If you choose to pay provisional tax instead of having the PIE do it for you, you won’t have any attributed PIE loss.

You’re treated as if you received the income or had the loss in your income year that includes the end of the PIE’s income year.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2888787.

Topics:
Money and consumer rights > Taxes
Money and consumer rights > Savings and retirement
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“Rules for calculating tax and income for foreign investors in investment entities”

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“How tax changes are calculated for people investing in multi-rate PIEs”

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

HM 36Calculating amounts attributed to investors

  1. The amount of attributed PIE income or attributed PIE loss for an income year for an investor in a multi-rate PIE is the total of the amounts calculated using the formula in subsection (2) for—

  2. each attribution period in the income year; and
    1. each day in the attribution period; and
      1. each investor class to which the investor belongs on the day.

        1. The formula is—

          percentage × (income − loss) ÷ days in period − (expenses − credits for fees).

          Where:

          • In the formula,—

          • percentage is the percentage of the investor's entitlement for the day to a distribution by the PIE to the investor class for the period:
            1. income is the amount of taxable income determined under section HM 35(5) and (7) for the period:
              1. loss is the amount of tax loss determined under section HM 35(5) and (7) for the period:
                1. days in period is the number of days in the period:
                  1. expenses is the total amount for the day in the period of—
                    1. fees for management or administration services paid from or charged to the account of the investor as a member of the investor class when the services are ongoing for the investor class:
                      1. expenditure of the investor as a member of the investor class and transferred under subpart DV (Expenditure specific to certain entities) to the PIE:
                      2. credits for fees is the amount of the credit for the fee paid or credited by the PIE to the account of the investor as a member of the investor class on the day in the period.

                        1. Despite subsection (3), an investor in a multi-rate PIE that chooses under section HM 44 to pay provisional tax has no attributed PIE loss.

                        2. The investor is treated as deriving the attributed PIE income or incurring the attributed PIE loss in the income year of the investor in which the end of the PIE's income year falls.

                        Compare
                        • s HL 26
                        Notes
                        • Section HM 36: 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 36(1): amended, on , by section 70(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                        • Section HM 36(3)(a): replaced (with effect on 1 April 2010 and applying for the 2010–11 and later income years), on , by section 89(1) of the Taxation (Annual Rates, Foreign Superannuation, and Remedial Matters) Act 2014 (2014 No 4).
                        • Section HM 36(3)(e)(i): substituted, on , by section 70(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                        • Section HM 36 list of defined terms pay: inserted, on , by section 70(3) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).