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HM 37: When income cannot be attributed
or “Rules for income that can't be linked to specific investors in a PIE”
You could also call this:

“Rules for when you're considered to own a share in a superannuation fund”

When you’re part of a superannuation fund that’s a multi-rate PIE (a type of investment), there are special rules about when you’re considered to own a share in it. These rules apply even if you don’t fully own your share yet.

You’re treated as owning a share in the fund during a certain time period if:

Your employer buys the share for you or on your behalf.

You and your employer agree that you’ll fully own the share after a certain amount of time (called a vesting period).

The vesting period starts when money is put into the fund and ends when you fully own your share.

This agreement must be made before the time period we’re talking about.

The vesting period must end after the time period we’re talking about.

The vesting period needs to be 5 years or less from when it’s supposed to end. But there are some exceptions:

If the fund existed on 17 May 2006, it can have a longer vesting period, but only as long as the longest period it allowed on that date.

If your share was moved from an old fund (that existed on 17 May 2006) to a new fund without big changes, the vesting period can be any length.

These rules help decide how the fund’s income is shared among its investors, even if they don’t fully own their shares yet.

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Next up: HM 39: New investors in existing investor classes

or “How new investors can join existing investment groups in a PIE”
Next

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

HM 38When superannuation fund investor has conditional entitlement

  1. This section applies for the purposes of section HM 37 in relation to an attribution period when a person has a conditional entitlement to an investor interest in a multi-rate PIE that is a superannuation fund that meets the requirements of subsection (4) in income or property of the PIE.

  2. The investor interest is treated as held by the person for the attribution period.

  3. A person is treated as having a conditional entitlement to an investor interest if—

  4. the investor interest is acquired by or for the person’s employer; and
    1. the person and the employer have agreed that the person will have an unconditional entitlement to the interest at the end of a vesting period that—
      1. starts on the date when a contribution to the fund is made; and
        1. ends on the date when the employee becomes unconditionally entitled to the investor interest to which the contribution relates; and
        2. the vesting period is within 5 years of its end as described in paragraph (b)(ii); and
          1. the agreement exists before the attribution period; and
            1. the vesting period ends after the attribution period.

              1. For the purposes of subsection (3)(b),—

              2. for a PIE that exists on 17 May 2006, a vesting period longer than 5 years is allowed but the vesting period must not be longer than the longest vesting period allowed by the PIE at that date for an interest created on that date:
                1. for a PIE that does not exist on 17 May 2006, but the investor interest has been transferred to it by a superannuation scheme in existence on that date without significant change to the interest, a vesting period of any length is allowed.

                  Compare
                  • s HL 17(2)
                  Notes
                  • Section HM 38: 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 38(3)(a): amended (with effect on 1 April 2015 and applying for the 2015–16 and later income years), on , by section 242(1) of the Taxation (Annual Rates for 2015–16, Research and Development, and Remedial Matters) Act 2016 (2016 No 1).
                  • Section HM 38(3)(b): replaced, on (applying for the 2012–13 and later income years), by section 71(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
                  • Section HM 38(3)(bb): inserted, on (applying for the 2012–13 and later income years), by section 71(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).