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Income Tax Act 2007

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

HM 43: Quarterly calculation option

You could also call this:

“How PIEs can calculate and pay tax every three months”

If you are a multi-rate PIE, you have a choice about how to calculate and pay your income tax. If you don’t choose the exit calculation or provisional tax calculation options, you must use the quarterly calculation option. Here’s how it works:

You need to figure out your tax every three months using a special formula in section HM 47. You have to tell the tax office that you’re using this option and when you’ll work out who owns what in your PIE.

You must pay the tax you owe for each quarter within one month after the quarter ends.

If someone’s investment in your PIE reaches the exit level, you treat them as if they have no tax rate for a short time. This includes five working days after the quarter ends. But this doesn’t apply if you choose to pay an amount under section HM 45.

If someone still has money invested in your PIE at the end of this exit period, you need to pay the value of their investment to the tax office at the same time as your quarterly tax payment.

When you use this option, you don’t have to pay provisional tax for the tax 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=DLM2888803.

Topics:
Money and consumer rights > Taxes
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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”

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HM 44: Provisional tax calculation option, or

“How PIEs can choose to calculate and pay provisional tax for the whole year”

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

HM 43Quarterly calculation option

  1. A multi-rate PIE that does not choose to calculate and pay its income tax liability under the exit calculation or provisional tax calculation options, must calculate its tax liability for each quarter of the tax year using the formula set out in section HM 47. 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. The PIE must pay to the Commissioner the amount of its income tax liability for the quarter within 1 month of the end of the quarter.

  3. If the investor interest of an investor in the PIE has reached the exit level, they are treated under section HM 61 as zero-rated for the exit period which includes a grace period of 5 working days after the end of the quarter. This subsection does not apply if the PIE voluntarily chooses to pay an amount under section HM 45.

  4. If the investor interest of an investor at the end of an exit period is more than zero, the PIE must pay an amount equal to the value of the interest to the Commissioner at the same time as the payment referred to in subsection (2).

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

Compare
  • s HL 22
Notes
  • Section HM 43: 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 43(1): replaced, on (with effect on 1 April 2010), by section 129(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
  • Section HM 43(3): amended, on , by section 102(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
  • Section HM 43(3): amended (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 97(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
  • Section HM 43(4): amended (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 97(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
  • Section HM 43 list of defined terms attribution period: inserted, on (with effect on 1 April 2010), by section 129(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
  • Section HM 43 list of defined terms zero-rated investor: repealed, on , by section 102(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).