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Income Tax Act 2007

Taxation of certain entities - Portfolio investment entities - Losses of certain multi-rate PIEs

HM 65: Use of land losses of investor classes

You could also call this:

“How investment groups can use losses from land investments to reduce future taxable income”

This section talks about how some special investment groups can use their losses from land investments. If your investment group has a land loss, you can carry it forward to use later to reduce your taxable income.

A land loss happens when more than half of your group’s investments are in land, land investment companies in New Zealand, or overseas land investment companies where you own more than 20%.

You can use these losses to lower the amount of income tax you need to pay in the future. However, if you’re a foreign investor in a special type of investment group, you can’t use these land losses.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2888857.

Topics:
Money and consumer rights > Taxes
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HM 64: Use of investor classes’ losses, or

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“Carrying forward losses from when a Portfolio Investment Entity (PIE) is first formed”

Part H Taxation of certain entities
Portfolio investment entities: Losses of certain multi-rate PIEs

HM 65Use of land losses of investor classes

  1. This section applies when an investor class of a multi-rate PIE that calculates and pays tax using the exit calculation option or the quarterly calculation option under section HM 42 or HM 43 has a land loss for a calculation period.

  2. The amount of land loss may be included in a loss balance carried forward under Part I (Losses) to a later calculation period and used under section HM 35(5) to reduce an amount of taxable income from the class.

  3. For the purposes of this section, a land loss means a tax loss under section HM 35(7) of an investor class of a PIE for a calculation period if, at the end of the period, the class has, through the investor interests of the members of the class, an entitlement to the distribution of the proceeds of the PIE's investments that—

  4. are an investment of the type listed in subsection (4); and
    1. have a value that is more than 50% of the market value of all the PIE's investments in which the class has the entitlement.

      1. For the purposes of subsection (3)(a), the investment must be—

      2. an investment in land:
        1. an investment in a land investment company that is resident in New Zealand:
          1. an investment in a non-resident land investment company in which the investor class has a voting interest of more than 20%.

            1. For a notified foreign investor in a foreign investment PIE, the amount of land loss is disregarded.

            Compare
            • s HL 32(2), (3)
            Notes
            • Section HM 65: 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 65(3)(a): substituted (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 73(1) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
            • Section HM 65(4) heading: added (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 73(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
            • Section HM 65(4): added (with effect on 1 April 2010), on (applying for the 2010–11 and later income years), by section 73(2) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
            • Section HM 65(5) heading: added, on , by section 85(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
            • Section HM 65(5): replaced, on , by section 110 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).
            • Section HM 65 list of defined terms foreign investment PIE: inserted, on , by section 85(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
            • Section HM 65 list of defined terms non-resident: inserted (with effect on 1 April 2010), on , by section 73(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
            • Section HM 65 list of defined terms notified foreign investor: inserted, on , by section 85(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
            • Section HM 65 list of defined terms resident in New Zealand: inserted (with effect on 1 April 2010), on , by section 73(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).
            • Section HM 65 list of defined terms voting interest: added (with effect on 1 April 2010), on , by section 73(3) of the Taxation (Annual Rates, Trans-Tasman Savings Portability, KiwiSaver, and Remedial Matters) Act 2010 (2010 No 109).