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Income Tax Act 2007

Taxation of certain entities - Portfolio investment entities - Using tax credits

HM 49: Tax credits: when sections HM 50 to HM 55 apply

You could also call this:

“When tax credit rules apply to multi-rate PIEs and their investors”

When you are part of a multi-rate PIE (Portfolio Investment Entity) or you are representing an investor in one, there are special rules about tax credits. These rules apply if your PIE hasn’t chosen to work out its income tax using the provisional tax calculation option.

The tax credits can only be used in specific ways, which are explained in sections HM 50 to HM 55 of the law. You’re not allowed to use these tax credits to lower the PIE’s income tax or get a tax refund. You also can’t give these tax credits away with a distribution or transfer them to someone else.

The rules in sections HM 51 to HM 55 are very important. They override most other parts of the law about tax credits, except for the part that talks specifically about tax credits for multi-rate PIEs and their investors.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2888818.

Topics:
Money and consumer rights > Taxes
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HM 48: Adjustments to investor interests or to distributions, or

“Changes to investor payments or shares when a PIE pays tax”

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HM 50: Attributing credits to investors, or

“How tax credits from investments are shared with investors”

Part H Taxation of certain entities
Portfolio investment entities: Using tax credits

HM 49Tax credits: when sections HM 50 to HM 55 apply

  1. Sections HM 50 to HM 55 apply in relation to the tax credits of a multi-rate PIE or proxy for an investor in a multi-rate PIE that has not chosen to calculate its income tax liability under section HM 44 using the provisional tax calculation option.

  2. The entity must not, other than under sections HM 51 to HM 55,—

  3. use the tax credit to reduce the liability of the entity for income tax or to obtain a refund of income tax:
    1. attach the tax credit to a distribution or transfer the tax credit to another person.

      1. Sections HM 51 to HM 55 override Part L (Tax credits and other credits) other than subpart LS (Tax credits for multi-rate PIEs and investors).

      Compare
      • s HL 29(1), (2)
      Notes
      • Section HM 49: 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).