Income Tax Act 2007

Taxation of certain entities - Portfolio investment entities - Formation losses

HM 70: Maximum amount of formation losses allocated by multi-rate PIEs to investor classes

You could also call this:

"How much loss multi-rate investment companies can give to their investors"

When you calculate the taxable amount of an investor class, you use a formula. The formula is class net income minus credits divided by rate. You find the class net income under section HM 35(4). You find the credits by adding imputation credits, Maori authority credits, and RWT credits. The rate is the basic rate for companies, which you can find in schedule 1. You use this formula despite what sections HM 68 and HM 69 say.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM2888870.

This page was last updated on 29 January 2026 — View changes

Topics:

Money and consumer rights > Taxes

HM 69: When formation losses carried forward are 5% or more of formation investment value: 3-year spread, or

"Spreading large PIE formation losses over three years for tax calculations"

HM 71: Choosing to become PIE, or

"How to choose to be a PIE for tax purposes"

Part HTaxation of certain entities
Portfolio investment entities: Formation losses

HM 70Maximum amount of formation losses allocated by multi-rate PIEs to investor classes

Despite sections HM 68 and HM 69, the maximum amount of formation loss that may be allocated, when calculating under section HM 35(5) the taxable amount of an investor class for an attribution period, is calculated using the formula—
$class net income − (credits ÷ rate).$

Where:
In the formula,—
class net income is the amount of the net income of the investor class for the period under section HM 35(4):
credits is the total amount attributed to the investor class for the period of—
1. imputation credits:
2. Maori authority credits:
3. RWT credits:
rate is the basic rate for companies set out in schedule 1, part A, clause 2 (Basic tax rates: income tax, ESCT, RSCT, RWT, and attributed fringe benefits).

Compare

s HL 30(6), (7)

Notes

Section HM 70: inserted, on 1 April 2010 (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Section HM 70(2)(b)(iv): repealed, on 1 April 2017, by section 143(1) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
Section HM 70 list of defined terms FDP credit: repealed, on 1 April 2017, by section 143(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).