Your tax return and your PIE income
When to complete a tax return
| If you ... | then you ... | and file it by ... |
|---|---|---|
|
already complete an IR3 return |
will continue to do so |
the usual return filing dates.* |
|
have previously:
|
must file an IR3 tax return if you:
|
the usual return filing dates.* |
*Unless you have an extension of time to file a tax return, filing dates are:
- the 7th of the fourth month after balance date for taxpayers with late balance dates (ie 1 April to 30 September), or
- 7 July following the end of the tax year for other individual taxpayers.
Including PIE income in your tax return
You only have to include PIE income in your tax return when it is non-excluded income.
If you receive distributions from a PIE not listed on the New Zealand stock exchange, these are treated as excluded income and do not need to be included in your tax return.
| If ... | then ... |
|---|---|
|
you have given the correct PIR to your PIE and you are not a zero-rated investor |
you do not need to include the PIE income in your income tax return. |
|
you have given a rate lower than your correct PIR |
you must include the PIE income in your tax return and pay tax based on your marginal tax rate. The tax deducted will be allowed as a credit in your tax return. |
|
you are an investor withdrawing your investment from a PIE that zero rates the income for a quarter |
you must include the PIE income in your tax return and pay tax based on your marginal tax rate. Any residual interest in the PIE after withdrawal will be paid to Inland Revenue. This amount is then allowed as a tax credit in your tax return. |
If you've made a mistake with your PIR
| If ... | then ... | and ... |
|---|---|---|
|
you have given the PIE the wrong PIR |
you need to notify the PIE as soon as possible |
if the PIE has not performed its tax calculation for the period (quarter or annual), it may be able to adjust for the correct amount of tax. |
|
you have given the PIE a PIR that was lower than the correct rate |
you will need to include all the income taxed at the lower rate for the period in your tax return* |
a credit will be allowed for any PIE tax paid during the period. |
|
your PIR was higher than it should have been |
the allocated income remains excluded income and there is no refund. |
|
* Although the income is no longer treated as excluded income, it will not be taken into account when determining entitlements to working for families tax credits.
PIE income and foreign tax credits
Where your income allocated by the PTRE has been taxed at a PIR of 19.5% or 30%, the foreign tax credits are taken into account by the PTRE when it calculates its tax liability.
Where your income allocated by the PTRE has been taxed at a PIR of 0% on exit from the PTRE, the foreign tax credits can be claimed in your tax return up to the amount of the tax you are required to pay on the income allocated by the PTRE.
PIE income and New Zealand tax credits
Where your income allocated by the PTRE has been taxed at a PIR of 19.5% or 30%, New Zealand tax credits are taken into account by the PTRE when it calculates its tax liability.
Where your income allocated by the PTRE has been taxed at a PIR of 0% on exit from the PTRE, New Zealand tax credits can be claimed in your tax return. Your income tax return guide will show to what extent the New Zealand tax credits can be used.
Excess New Zealand tax credits and losses
Most PTREs that have excess New Zealand tax credits or losses in a tax calculation period receive a tax credit calculated at the individual investor's PIR.
The PTRE then allocates the credit to the investor by adjusting their investor's interest in the PTRE, or making a distribution to the investor.
Your PIE income and provisional tax
| If your PIE-allocated income is taxed at... | then ... | Note |
|---|---|---|
|
a rate greater than zero and your PIE income does not need to be included in your tax return |
you may have a reduction in your provisional tax liability depending on the provisional tax method chosen. |
|
|
a zero rate where you have exited the PIE |
your exposure to a provisional tax liability may be increased. |
Previously distributions from your collective investment vehicle (CIV) might have attached credits that could be used against your income. Under the PIE rules those credits may no longer be available. See the example below. |
Example of how new PIE rules work
| 2007 (pre-PIE) | 2008 (under PIE rules) | ||
|---|---|---|---|
|
Income received from CIV |
$10,000 |
Income received from CIV |
$10,000 |
|
Credits attached |
$ 1,500 | Credits attached | $ 1,500 |
|
Tax paid by CIV |
$ 1,800 | Tax paid by PIE (zero-rated) | $ 0.00 |
|
Investor tax due |
$ 3,300 | Investor tax due | $ 3,300 |
|
Less credits |
$ 3,300 | Less credits | $ 1,500 |
|
Balance due |
$ 0.00 | Balance due | $ 1,800 |
Date published: 21 Jul 2008
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