Notified foreign investors (NFI)

There is also a new class of investor, a notified foreign investor. A non-resident who holds an investment in a foreign investment PIE may notify the PIE that they wish to be treated as a notified foreign investor.

The investor must not be:

• resident in New Zealand
• a CFC
• a FIF that has a resident investor who holds an income interest of 10% or more of the FIF
• a non-resident trustee of a trust that is not a foreign trust.

Investor requirement to provide more information

To become a notified foreign investor, the investor must provide the following additional information:

• date of birth, if applicable
• home address in their country or territory of residence
• their equivalent of a IRD number or a declaration that they are unable to provide this number.

The Commissioner may add to or change the list of information.

PIE's requirements for notified foreign investors

The foreign investment PIE must once a year ask the investor to confirm they meet all of the above requirements to remain a notified foreign investor.
If they receive no response the PIE may continue to treat the investor as a notified foreign investor.

A non-resident that does not meet these requirements continues to have the 28% prescribed investor rate applied.

The foreign investment PIE then must apply the appropriate prescribed investor rate. For zero-rate PIEs use 0% PIR and for variable-rate PIEs use the appropriate variable rate.

The Commissioner can advise the PIE to disregard an investor's notification if he considers on reasonable grounds that the person does not meet or no longer meets the requirements. The change should be made as soon as reasonably practicable. The new provision sees the investor being treated as a non-resident and have the 28% PIR applied. If the change is required because the investor is a resident the change comes within the existing power of the Commissioners to advise a corrected notified investor rate.

A notified foreign investor cannot be treated as an exiting investor and have the zero-rate applied.

 

Date published: 30 Aug 2011

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