Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

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

HM 55H: Treatment when certain requirements for foreign investment PIEs not met

You could also call this:

“Rules for foreign investment PIEs that don't meet certain requirements”

If you’re a foreign investment zero-rate PIE and you get income that isn’t from overseas or allowed under section HM 55G, you’ll be treated as a foreign investment variable-rate PIE from the day you get that income.

If you’re a foreign investment zero-rate PIE and you go over the allowed amount of income set out in section HM 55G(a) and (b) at the end of a quarter, and you don’t fix this by the end of the next quarter, you’ll be treated as a foreign investment variable-rate PIE from the start of the third quarter. You’ll need to use the rates in schedule 6, table 1B for all your income sources and investment types.

If you’re a foreign investment variable-rate PIE and you don’t meet the rules in section HM 13(6), section HM 19C, or section HM 55F(3) at the end of a quarter, and you don’t fix this by the end of the next quarter, you’ll be treated as a multi-rate PIE that isn’t a foreign investment PIE from the start of the third quarter.

If any of these problems happen and aren’t fixed before 1 April 2012, you’ll be treated as a multi-rate PIE that isn’t a foreign investment PIE.

This text is automatically generated. It might be out of date or be missing some parts. Find out more about how we do this.

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4025519.

Topics:
Money and consumer rights > Taxes
Business > Industry rules
Previous

HM 55G: Allowable amounts and thresholds for income with New Zealand source, or

“Limits on New Zealand income sources for certain investment funds”

Next

HM 56: Prescribed investor rates: schedular rates, or

“How the government sets tax rates for certain investments”

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

HM 55HTreatment when certain requirements for foreign investment PIEs not met

  1. A foreign investment zero-rate PIE that derives an amount of income other than a foreign-sourced amount or an amount allowable under section HM 55G is treated from the date on which the income is derived as a foreign investment variable-rate PIE.

  2. Subsection (3) applies for an income year and a foreign investment zero-rate PIE when—

  3. on the last day of a quarter (the first quarter), a threshold set out in section HM 55G(a) and (b) for allowable amounts of income is exceeded; and
    1. the failure is not remedied by the last day of the next quarter (the second quarter).

      1. The PIE is treated from the first day of the third quarter as a foreign investment variable-rate PIE, and must apply to each amount of income the variable investor rates under schedule 6, table 1B for all income sources and investment types.

      2. Subsection (5) applies for an income year and a foreign investment variable-rate PIE when—

      3. on the last day of the first quarter, the PIE does not meet the requirements of—
        1. section HM 13(6):
          1. section HM 19C:
            1. section HM 55F(3):
            2. the failure is not remedied by the last day of the second quarter.

              1. The PIE is treated from the first day of the third quarter as a multi-rate PIE that is not a foreign investment PIE.

              2. For the purposes of subsections (1) and (3), if a breach occurs and is not remedied before 1 April 2012, the PIE is treated as a multi-rate PIE that is not a foreign investment PIE.

              Notes
              • Section HM 55H: 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).