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Income Tax Act 2007

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

HM 55F: Treatment of income attributed to notified foreign investors

You could also call this:

“Tax rules for foreign investors in special investment funds”

When you invest in a foreign investment PIE (Portfolio Investment Entity), the way your income is treated depends on whether you’re a notified foreign investor and what type of PIE it is.

If you’re investing in a foreign investment zero-rate PIE, they will apply a tax rate of 0% to all the income they attribute to you.

If you’re investing in a foreign investment variable-rate PIE, they will handle your income differently. They will look at where each bit of your income comes from and what type of investment it is if it’s not from overseas. Then, they will apply different tax rates to each part of your income based on its source and type. These tax rates are set out in a special table in the law.

The PIE will use these rules when they’re working out how much tax they need to pay on your behalf or how much income to attribute to you.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4025515.

Topics:
Money and consumer rights > Taxes
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HM 55E: Changes in status of investors in foreign investment PIEs, or

“How foreign investment PIEs handle changes in investor residency or status”

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HM 55FB: Notified foreign investors and tax credits for supplementary dividends, or

“Foreign investors in PIEs may get extra dividend payments from NZ companies”

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

HM 55FTreatment of income attributed to notified foreign investors

  1. This section applies for a foreign investment PIE for the purposes of the calculations that must be made under sections HM 36 and HM 47 in relation to the income attributed to a notified foreign investor in the PIE or the income tax liability of the PIE.

  2. A foreign investment zero-rate PIE must apply a prescribed investor rate of 0% under schedule 6, table 1, row 9 (Prescribed rates: PIE investments and retirement scheme contributions) to all amounts attributed to the investor.

  3. A foreign investment variable-rate PIE must, for all amounts attributed to the investor,—

  4. identify the income source of each amount; and
    1. identify the investment type of each amount that is not a foreign-sourced amount; and
      1. apply the relevant prescribed investor rate set out in schedule 6, table 1B to the amount.

        Notes
        • Section HM 55F: 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 79(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).