Portfolio investment entity (PIE) entry rules - eligibility

The eligiblity criteria

There are a number of different eligibility criteria, depending on the type of PIE you elect to become. The following table indicates which of the eligibility criteria under the PIE rules must be satisfied for each PIE type:

Requirement	MRP	Listed	Benefit fund	Life fund
Collective schemes	X	X	X
Residency	X	X	X	X
Re-entry after 5 years	X	X	X	X
Rights to investment proceeds	X	X	X
Minimum number of investors	X	X	X	X
Investor return adjustment	X
Imputation credit distribution		X
Maximum investor interest	X	X	X	X
Investment type	X	X	X	X
Income sources	X	X	X	X
Shareholding investment	X	X	X	X
Class shareholding investment	X	X	X	X

Multi-rate PIE

A multi-rate PIE must be either a company (this includes a body corporate, unit trust, incorporated society), a superannuation fund, or a group investment fund and must satisfy the general eligibility requirements and certain entity-specific eligibility requirements.

Listed PIE

A listed PIE must be a company listed on a recognised exchange in New Zealand and must satisfy the general eligibility requirements and certain entity-specific eligibility requirements.

Under the PIE rules, an unlisted company may become a listed PIE where it intends to become, and has undertaken certain actions to become, a listed company.

It will cease to be a listed PIE if it does not become listed on a recognised exchange in New Zealand within a 2-year period from the date on which the election to become a PIE takes effect.

A listed company that elects to be a multi-rate PIE is not a listed PIE.

Benefit fund PIE

A benefit fund PIE must be a defined benefit fund (i.e. a superannuation scheme registered under the Superannuation Schemes Act 1989 and complying with section 15(1)(a) of that Act) that does not attribute income to investors, and must satisfy the general eligibility requirements and certain entity-specific eligibility requirements.

Life fund PIE

A life fund PIE must be a separate identifiable fund as 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 held in the fund.

Zero-rate PIE

A foreign investment zero-rate PIE must meet the general eligibility requirements to be a multi-rate PIE, and also:

• cannot use the provisional tax filing option
• cannot derive income other than from foreign sources and amounts that come from investments within the thresholds
• must obtain the additional investor level information requirements for notified foreign investors and annually confirm their current status.

A zero-rate PIE that:

• is a unit trust that the Unit Trust Act 1960 applies to, and
• has a resident trustee

will be resident in New Zealand for the purposes of the "residence in New Zealand" requirement.

Variable-rate PIE

A foreign investment variable-rate PIE must meet the general eligibility requirements to be a multi-rate PIE, and also

• cannot use the provisional tax filing option
• cannot:
  • have an interest including a right or option in relation to New Zealand-based land, or
  • derive income from land including from the disposal of land
• must:
  • identify the income source and investment type for New Zealand-based income for notified foreign investors, and
  • apply the appropriate prescribed investor rate for each amount
• cannot carry voting interest of more than 20% for a company or an entity that qualifies for PIE status for an investment in a resident land investment company. For a unit trust it must have a market value of all interests in the entity of no more than 20%
• must obtain the additional investor level information requirements for notified foreign investors and annual confirm their current status.

 

Date published: 30 Aug 2011

Back to top