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Portfolio investment entity (PIE) registration

Types of PIE

There are eight types of PIE. If you fit into more than one type, select the first one in descending order that applies to you.

Type Description

Custodian

A custodian is an intermediary nominee or agent. Investors can invest through the custodian into a PIE. The custodian takes on the PIE obligations on its investors' share of the income from various PIEs. 

A custodian is also known as a portfolio investor proxy (PIP) (this is the legal term) or a wrap account.

Land

The land type applies to a PIE with more than 50% of the value of one of its classes of investments in land.

This type of PIE must apply the loss offset rule. The losses from the land class can only be offset against income from that same land class.

Wholesale

A wholesale PIE has investors that are themselves PIEs.

The wholesale IE may allocate all its income to other PIEs. This would result in no IE tax to pay for the wholesale PIE.

Defined benefit fund

This type of PIE does not allocate income to investors.  Therefore the defined benefit fund cannot calculate its tax liability using the prescribed investor rate.

Tax for a defined benefit fund is at the basic income tax rate currently applying to the fund.

Where a fund is both a defined benefit and defined contribution fund (known as a hybrid fund) the entity needs to choose one of the other types of portfolio investment entity.

Listed company

This type of PIE is known as a portfolio listed company, and is required to continue to file income tax returns.

An eligibility requirement for a portfolio listed company is that the company be listed on a recognised exchange in New Zealand.

Superannuation fund

A superannuation PIE attracts investments savings for retirement purposes.

This type of PIE covers general retirement schemes.

Investment-linked life fund

This is a type of PIE that is part of a life insurer that holds investments subject to life insurance policies under which benefits are directly linked to the value of the investments.

Retail

This is a general type of PIE that meets the standard requirements and is not covered by any of the abovementioned types.

Filing options

There are four options for filing returns. These options apply for the whole tax year and can only be changed before the start of a tax year. You cannot change filing options part way through a tax year.

Quarterly zero

This option applies to PIEs who establish their income at the end of the quarter and allocate the income back across the quarter.

Where an investor leaves during the quarter, the entity does not know the amount of income and so cannot calculate and deduct the tax from the exiting investor's interest prior to exiting. The entity is allowed to treat that investor as zero rated for the income in that quarter. This is referred to as a zero-rated exiting investor.

The tax rate for this filing option is an average of the investors prescribed investor rate.

The required returns and payments for qualifying PIEs who elect this option are as follows:

Return Payment due date

31 December YYYY

31 January YYYY

31 March YYYY

30 April YYYY

30 June YYYY

31 July YYYY

30 September YYYY

31 October YYYY

Annual exited investor

You will need to file:

  • monthly returns for investors who have exited the PIE during the previous month. The return and payment are due within one month from the end of the period. Returns and payments for the month of November are due by 15 January.
  • a return for the year ended 31 March for investors who remain in the PIE. Payment is due by 30 April.
  • an annual reconciliation return and investor certificates.

Provisional tax with the PIE tax calculated using the investors prescribed investor rate

Filing this type of return means you:

  • are exempt from filing portfolio investment entity periodic returns, and the payments process.
  • will need to file annual reconciliation return and investor certificates.
  • must continue to file income tax returns and pay tax according to current procedures.

Annual income tax

Filing this type of return means you:

  • are exempt from filing all PIE returns and payments.
  • must adhere to current filing of income tax returns and payments of income tax.

Under this option, annual reconciliation return and investor certificates are not required.

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Date published: 16 Jul 2008

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