Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

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

HM 44: Provisional tax calculation option

You could also call this:

"A way for some investors to choose how they calculate and pay tax on their income throughout the year."

When you are a multi-rate PIE, you can choose to calculate your income tax liability on an income year basis and pay provisional tax. You must notify the Commissioner before the start of the income year or when you choose to become a PIE, under section 31B of the Tax Administration Act 1994. You will tell the Commissioner about the calculation option and the applicable attribution period.

If you choose to become a foreign investment PIE under section HM 71B, you cannot use this section to calculate and pay your income tax liability.

You must calculate your tax liability for the income year and pay provisional tax as required by subpart RC and terminal tax as required by subpart RB.

If your tax liability is a negative amount, you will carry the loss forward to a later tax year, and section HM 64 will not apply to you.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

This page was last updated on

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2888805.

Previous

HM 43: Quarterly calculation option, or

"Paying tax each quarter for some investments"

Next

HM 44B: NRWT calculation option, or

"How foreign investment PIEs can choose to calculate tax on certain dividends paid to overseas investors"

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

HM 44Provisional tax calculation option

  1. This section applies when a multi-rate PIE chooses to calculate its income tax liability on an income year basis and pay provisional tax by notifying the Commissioner before the start of the income year or when choosing to become a PIE. 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. Despite subsection (1), a multi-rate PIE that chooses under section HM 71B to become a foreign investment PIE must not apply this section to calculate and pay its income tax liability.

  3. The PIE must calculate its tax liability for the income year corresponding to the tax year under section HM 47 and pay provisional tax for the tax year as required by subpart RC (Provisional tax) and terminal tax for the tax year as required by subpart RB (Terminal tax).

  4. If the calculation of the liability results in a negative amount, the loss must be carried forward to a later tax year, and section HM 64 does not apply.

Compare
  • s HL 23(1), (2)
Notes
  • Section HM 44: 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 44(1): replaced, on (with effect on 1 April 2010), by section 130(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
  • Section HM 44(1B) heading: inserted, on , by section 73(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
  • Section HM 44(1B): inserted, on , by section 73(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
  • Section HM 44 list of defined terms attribution period: inserted, on (with effect on 1 April 2010), by section 130(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
  • Section HM 44 list of defined terms Commissioner: inserted, on (with effect on 1 April 2010), by section 130(2) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
  • Section HM 44 list of defined terms foreign investment PIE: inserted, on , by section 73(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).