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HM 36B: Calculating PIE schedular income adjustments for natural person investors
or “How tax changes are calculated for people investing in multi-rate PIEs”
You could also call this:

“Rules for income that can't be linked to specific investors in a PIE”

When a multi-rate PIE has income or property that no investor has an interest in, or that no one has a conditional entitlement to under section HM 38, this law applies to you.

In this case, the PIE is treated as if it were the only investor in an investor class that has an interest in that income or property. This is done when calculating amounts that can be given to investors under sections HM 35 and HM 36.

For foreign investment PIEs, there’s a special way to calculate deductions. You use a formula that takes into account the value of investor interests held by people who aren’t notified foreign investors, the total value of all investor interests, and the unadjusted deductions.

The formula uses these terms:

  • ‘Other than notified interests’ means the value of investor interests in the PIE held by investors who aren’t notified foreign investors at the end of the attribution period.
  • ‘Total interests’ means the total value of all investor interests in the PIE at the end of the attribution period.
  • ‘Unadjusted item’ means the value of the deductions that would be calculated without this special rule.

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Next up: HM 38: When superannuation fund investor has conditional entitlement

or “Rules for when you're considered to own a share in a superannuation fund”
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Part H Taxation of certain entities
Portfolio investment entities: Attributing income to investors

HM 37When income cannot be attributed

  1. This section applies when a multi-rate PIE has income or property in which no investor has an interest, or income or property in which no person has a conditional entitlement under section HM 38.

  2. The PIE is treated for the purposes of sections HM 35 and HM 36 (which relate to the calculation of amounts attributable to investors) as the sole investor in an investor class having an interest in the income or property.

  3. In the application, under subsection (2), of section HM 36 to a foreign investment PIE, the item deductions in the formula in section HM 35(2) for the investor class consisting of the PIE is treated as being the amount calculated using the formula—

    (other than notified interests ÷ total interests) × unadjusted item.

    Where:

    • In the formula,—

    • other than notified interests is the value of investor interests in the PIE held at the end of the attribution period by investors other than notified foreign investors:
      1. total interests is the total value of investor interests in the PIE at the end of the attribution period:
        1. unadjusted item is the value of the item deductions that would be calculated for the investor class in the absence of subsection (3).

          Compare
          • s HL 17(1)
          Notes
          • Section HM 37: 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 37(2): replaced (with effect on 1 April 2012), on , by section 65(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
          • Section HM 37(3) heading: inserted (with effect on 1 April 2012), on , by section 65(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
          • Section HM 37(3): inserted (with effect on 1 April 2012), on , by section 65(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
          • Section HM 37(4) heading: inserted (with effect on 1 April 2012), on , by section 65(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
          • Section HM 37(4): inserted (with effect on 1 April 2012), on , by section 65(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
          • Section HM 37 list of defined terms investor interest: repealed, on , by section 68(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).