Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

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

HM 55C: Modified source rules

You could also call this:

“Special rules for determining income sources for foreign investors in certain NZ investment funds”

You need to know about special rules for where money comes from when you’re a foreign investor in a certain type of investment fund in New Zealand. These funds are called foreign investment PIEs.

If you’re a foreign investor who has told the fund about your status, the money you get from the fund isn’t automatically seen as coming from New Zealand. This is true even if the fund does its business in New Zealand.

Also, if the fund makes deals or does work in New Zealand, the money you get from that isn’t automatically seen as coming from New Zealand. But this only applies to the part of your money that the fund invests outside of New Zealand.

These rules change the usual ways of deciding where money comes from. You can find the usual rules in section YD 4(2) and section YD 4(3) of the law.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4025509.

Topics:

Money and consumer rights > Taxes

HM 55: Tax credits for losses, or

“Multi-rate PIEs can get tax credits for negative tax calculations”

HM 55D: Requirements for investors in foreign investment PIEs, or

“Rules for foreign investors in special New Zealand investment funds”

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

HM 55CModified source rules

Despite section YD 4(2) (Classes of income treated as having New Zealand source), income attributed to a notified foreign investor by a foreign investment PIE is not treated as having a source in New Zealand merely because the business of the PIE is carried on in New Zealand.
Despite section YD 4(3), income attributed to a notified foreign investor by a foreign investment PIE is not treated as having a source in New Zealand merely because the income is derived from a contract made or performed in New Zealand but only to the extent to which the income relates to the PIE's investments outside New Zealand.

Notes

Section HM 55C: inserted, on 29 August 2011 (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 79(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).