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Income Tax Act 2007

Taxation of certain entities - Portfolio investment entities - Calculating and paying tax liability

HM 42: Exit calculation option

You could also call this:

“When you stop investing, the company calculates and pays your income tax for you.”

When you are in a multi-rate PIE, it can choose to calculate its income tax liability for you if you are exiting or remaining. The PIE must tell the Commissioner about this choice under section 31B of the Tax Administration Act 1994. The PIE also needs to tell the Commissioner about the applicable attribution period.

If you are an investor whose interest has reached the exit level, the PIE must calculate its income tax liability for you under section HM 47 for the relevant exit period. The exit level and exit periods are determined under sections HM 62 and HM 63.

The PIE must pay the Commissioner the amount of income tax liability for you if you are an exiting investor. This payment must be made within one month after the end of the month of withdrawal, or by the following 15 January if the month of withdrawal is November. The PIE must also pay the rest of its income tax liability for the tax year within one month after the end of the tax year for remaining investors.

The PIE does not have to pay provisional tax under subpart RC for the tax year. It must calculate its income tax liability under section HM 47 for the relevant period for investors and periods in the income year other than exit periods.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2888801.

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HM 41: Options for calculation and payment of tax, or

"How to calculate and pay tax as a multi-rate PIE"

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HM 42B: Part-year tax calculations for PIEs under the exit calculation option for the 2010–11 tax year, or

"How PIEs calculate tax in two parts for the 2010-11 tax year"

Part H Taxation of certain entities
Portfolio investment entities: Calculating and paying tax liability

HM 42Exit calculation option

  1. This section applies when a multi-rate PIE chooses for a tax year to calculate its income tax liability for exiting investors and remaining investors. The PIE must notify the Commissioner under section 31B of the Tax Administration Act 1994 of the calculation option and of the applicable attribution period.

  2. For an investor whose interest has reached the exit level during the tax year, the PIE must calculate its income tax liability under section HM 47 for the investor and the relevant exit period. The exit level and exit periods are determined under sections HM 62 and HM 63.

  3. For investors and periods in the income year other than exit periods, the PIE must calculate its income tax liability under section HM 47 for the relevant period.

  4. The PIE must pay to the Commissioner—

  5. the amount of income tax liability for an exiting investor for the exit period—
    1. within 1 month after the end of the month of withdrawal; or
      1. if the month of withdrawal is November, by the following 15 January; and
      2. the rest of the PIE's income tax liability for the tax year within 1 month after the end of the tax year for remaining investors in the PIE at the end of the tax year, after allowing for any payment under paragraph (a) or any voluntary payment under section HM 45.

        1. The PIE is not required to pay provisional tax under subpart RC (Provisional tax) for the tax year.

        Compare
        • s HL 24(1)–(4)
        Notes
        • Section HM 42: 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 42(1): replaced, on (with effect on 1 April 2010), by section 128(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
        • Section HM 42 list of defined terms attribution period: inserted, on (with effect on 1 April 2010), by section 128(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
        • Section HM 42 list of defined terms notify: inserted, on , by section 74 of the Taxation (Transformation: First Phase Simplification and Other Measures) Act 2016 (2016 No 27).