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Income Tax Act 2007

Taxation of certain entities - Portfolio investment entities - Prescribed and notified rates for investors in multi-rate PIEs

HM 57B: Prescribed investor rates for new residents

You could also call this:

“How new residents' investment tax rates are determined”

When you become a New Zealand resident, this section helps figure out your prescribed investor rate. This rate is used for investments and retirement scheme contributions.

You need to include all your foreign income in your assessable income, even if you earned it when you weren’t living in New Zealand.

If you think you’ll earn much less money in your first year or two as a New Zealand resident compared to the year before you moved here, you can choose not to use this rule. You can make this choice for the year you become a resident, the year after, or both years.

The rule that usually lets new residents keep some overseas income tax-free doesn’t apply when working out your prescribed investor rate.

To find out more about prescribed rates for investments and retirement scheme contributions, you can look at schedule 6. For information about what counts as assessable income, you can check section BD 1(5)(c). If you want to know about income that’s usually tax-free for new residents, you can read Section CW 27.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM4385302.

Topics:
Money and consumer rights > Taxes
Immigration and citizenship > Visas
Savings and retirement > Savings and retirement
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Part H Taxation of certain entities
Portfolio investment entities: Prescribed and notified rates for investors in multi-rate PIEs

HM 57BPrescribed investor rates for new residents

  1. This section applies for the purposes of determining a person's prescribed investor rate under schedule 6, table 1 (Prescribed rates: investments and retirement scheme contributions) when the person becomes a New Zealand resident.

  2. Despite section BD 1(5)(c) (Income, exempt income, excluded income, non-residents' foreign-sourced income, and assessable income), the person must include the total amount of their non-residents' foreign-sourced income in their assessable income.

  3. The person may choose not to apply this section for either the income year in which they become a New Zealand resident or the following income year (the resident years) or for both resident years, if they reasonably expect that their taxable income in the relevant resident year will be significantly lower than their total income from all sources for the income year before the first resident year.

  4. Section CW 27 (Certain income derived by transitional resident) is ignored for the purposes of this section.

Notes
  • Section HM 57B: inserted, on (applying for the 2012–13 and later income years), by section 81(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).