PIE income

About your PIE

There are some facts you will need to know about your PIE to help you with your tax responsibilities.

When the PIE sends you your income tax details

Generally PIEs that calculate tax based on their investors' PIR need to provide the information by 30 June following the tax year.

PIEs that quarterly file, and zero-rate their exiting investors need to provide the information within one month of the end of the quarter in which the investor exited.

If you don't get any details from your PIE or you think the investor statement is wrong, then you need to contact them.

PIEs listed on the stock exchange may send a dividend statement to their investors.

Excluded and non-excluded income

Excluded income is income allocated by the PIE that does not need to be included in your tax return.

Non-excluded income is income allocated by the PIE that must be included in your tax return.

The PIE's responsibilities when you cash up some units

This depends on the type of PIE that you have invested in. Generally your PIE will deduct the tax before returning the funds to you.

However, certain PIEs are not able to calculate the tax when you withdraw your interest. If the PIE calculates tax for the period of withdrawal at a zero rate, the income is no longer excluded income and you will need to include this in your income tax return.

Your PIE will provide you with a statement setting out the relevant details to be included in the return. They must issue this by the end of the month following the period in which you exited.

PIE income and Inland Revenue

PIEs that calculate tax based on their investors' PIR, forward investor income details to us when they file their annual reconciliation.

If your PIR was correct and the PIE allocated income was excluded income, we will not send you anything relating to the income from your PIE. However if you are requred to file an income tax return which includes taxable PIE income, we will acknowledge your return.

The PIE and IRD numbers

If ...	then you ...
the investments are held in your name	use your own IRD number.
the investments are jointly held	use the IRD number belonging to the individual with the higher PIR*.
all parties qualify for the higher rate	can select an IRD number.

*Note that the individual with the lower marginal rate will not be able to get a tax refund of the difference in rates.

How other entitlements and obligations are affected by PIE income

Working for families tax credits

Generally income from the PIE you invest in does not affect your entitlement to working for families tax credits, even if you:

• have provided the PIE with a rate lower than your correct PIR, and
• are required to include the PIE income in your tax return.

If you receive dividends from a company listed on the stock exchange and elect to include the dividend in your tax return, it will be taken into account in calculating your entitlement to working for families tax credits.

Student loan repayments

If the PIE income is ...	then it ...
excluded income	is not taken into account when determining student loan repayments.
non-excluded income	will be taken into account in determining student loan repayments.

Child support payments

If the PIE income is ...	then it ...
excluded income	is not taken into account when determining child support payments.
non-excluded income	will be taken into account in determining child support payments.

Joint investments

The information in this section applies if you are a spouse, de facto or civil union partner who holds PIE investments jointly.

Splitting the investment

Investments held in a single name cannot be split. Where the investments are jointly held, income is attributed to the investors according to their share of the investment. Usually for spouses this will be a 50/50 split.

Choosing the PIR

To qualify for the 19.5% rate, all holders of the investment need to fit within the income requirements for that rate. That is, the individual investor must be a New Zealand resident and either of their last two year's taxable income was:

• $38,000 or less, and
• $60,000 or less after adding the allocated income or loss from your PIE.

Otherwise the 30% rate will apply, regardless of whether one of the partner's income falls below the threshold.

Refund of overpaid PIE tax if the investment is in joint names

Tax calculated by the PIE at:

• the correct higher PIR for another holder in the joint investment, or
• the default rate

is a final tax, and you cannot get a refund even if your correct PIR would be 19.5% if you were to invest on your own.

Returning joint income

Income will be required to be included in your tax return where it is not treated as excluded income. In such cases the investment income is apportioned between the investors according to their share of the investment and included with any income derived in their own right.

Name and IRD number recorded by the PIE

The information sent by the PIE will record the name under which the investment is held and the IRD number of the investor with the highest PIR.

Declaring the dividend if the PIE is a company listed on the New Zealand stock exchange

Each holder of the joint investment can choose to declare their share of the dividend in their tax return, provided that the holder is a New Zealand resident and is a natural person or a trustee.

Lower rate partners and rebates

Rebates are available to certain types of PIEs where the investor is not a zero-rated portfolio investor. The PIE allocates each investor's share of the rebate by adjusting the investor's portfolio investor interest or making a distribution.

Transferring your investments

Income from investments held in your name cannot be transferred to another person, for example a spouse on a lower income. However, investments can be sold. There are rules regarding valuation of property sold to associated persons.

Ceasing your investments

If you want to cease your investment, you should contact your PIE to find out what is required, and whether there will be any costs involved.

You do not have to tell us if you exit the PIE.

Investments held at the time of death

Investments held at the time of death will pass to the estate. The transfer to the estate is considered to be an exit and the PIE may zero rate the income in the period to the date of death. The zero-rated PIE income will have to be included in the tax return to the date of death. If the PIE calculates tax, the income will be treated as excluded income.

If the investments are not distributed to the beneficiaries but continue to be held in the estate, the executor can choose whether to advise the PIE of a 30% or 0% PIR.

Investors leaving or arriving in NZ

Your PIR is based on income taxable in New Zealand received in the previous two tax years.

If you are ...	and ...	then you ...
an investor who has become a New Zealand resident	you have not previously invested in a PIE	can use a PIR of 19.5% for two years after arriving in New Zealand.
a resident who has invested in a PIE	who then ceases to be a resident	should apply a PIR of 30% from the date you leave New Zealand and tell the PIE of the change as soon as possible.

 

Date published: 11 May 2008

Back to top