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Income Tax Act 2007

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

HM 53: Use of tax credits other than foreign tax credits by PIEs

You could also call this:

“How PIEs can use certain tax credits for their income tax”

When a multi-rate PIE (Portfolio Investment Entity) has tax credits other than foreign tax credits, it can use them in certain ways. These credits must be linked to an investor in a specific group, but not to investors who are zero-rated, leaving the PIE, or are foreign investors with imputation credits. The PIE can use these tax credits to pay its own income tax for the year, for that investor or other investors in the same or different groups. The PIE must use up any credits from section HM 51 first. The amount of the tax credit is the same as the amount given to the investor. This rule helps PIEs manage their tax obligations for different types of 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=DLM2888827.

Topics:
Money and consumer rights > Taxes
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Part H Taxation of certain entities
Portfolio investment entities: Using tax credits

HM 53Use of tax credits other than foreign tax credits by PIEs

  1. This section applies when a multi-rate PIE has—

  2. a tax credit under Part L (Tax credits and other credits) other than a tax credit under subpart LJ (Tax credits for foreign income tax); and
    1. the credit is attributable in a tax year to an investor in an investor class other than—
      1. a zero-rated investor:
        1. an exiting investor who is treated under section HM 61 as zero-rated:
          1. a notified foreign investor in a foreign investment PIE, in relation to a credit that is an imputation credit:
            1. a transitional resident who chooses under section HM 55D(8) to use a prescribed investor rate set out in schedule 6, table 1, row 10 (Prescribed rates: PIE investments and retirement scheme contributions).

            2. The PIE may use the tax credit under section LS 1 (Tax credits for multi-rate PIEs) to satisfy its income tax liability for the tax year in relation to the investor as a member of the class or of another investor class. A tax credit under this section is used only after the use of any credit under section HM 51.

            3. The amount of the tax credit is the amount attributed.

            Compare
            • s HL 29(13)
            Notes
            • Section HM 53: 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 53(1)(b)(ii): amended, on (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 78(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
            • Section HM 53(1)(b)(iii): inserted, on (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 78(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
            • Section HM 53(1)(b)(iii): amended, on (applying for the 2013–14 and later income years), by section 106(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
            • Section HM 53(1)(b)(iv): inserted, on (applying for the 2013–14 and later income years), by section 106(1) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
            • Section HM 53(2): amended (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 70(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
            • Section HM 53 list of defined terms foreign investment PIE: inserted, on , by section 78(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
            • Section HM 53 list of defined terms imputation credit: inserted, on , by section 78(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
            • Section HM 53 list of defined terms notified foreign investor: inserted, on , by section 78(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
            • Section HM 53 list of defined terms prescribed investor rate: inserted, on , by section 106(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
            • Section HM 53 list of defined terms transitional resident: inserted, on , by section 106(2) of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).