Look through rule - wholesale to retail PIEs and PIPs
How income is treated currently
Where a:
- retail PIE invests into a wholesale PIE, or
- PIP invests into a PIE
the retail PIE or PIP would only normally derive attributed PIE income.
The income would all be treated as being New Zealand-sourced and of one type. Therefore a notified foreign investor would not be able to receive the tax reduction intend by the law change.
How income will be treated under the proposed changes
A new provision has been included that allows a retail PIE or PIP to choose to look through the wholesale PIE to identify the source and type of income that it was attributed, so it can correctly calculate its tax obligations for the income for its notified foreign investor.
To do this the retail PIE or PIP would need to have sufficient information about the attributed PIE income they derive from the wholesale PIE.
Note
This rule is not just for foreign investment PIEs.
Date published: 30 Aug 2011
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