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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:

  • 31 May, or
  • 30 June.

For the 2012 income year if the funds you have in the PIE are not in a locked-in fund such as in a KiwiSaver and similar retirement savings schemes or superannuation funds, the PIE is required to send the information to you by 31 May. This earlier date is required for you for Working for Families Tax Credit purposes. The PIE income must be included in family scheme income and will need to be included on the Working for Families Tax Credits income adjustment form.

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, you need to contact them.

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

Note

These dividends are not liable for RWT.

Excluded and non-excluded income

Excluded income is income attributed by the PIE that is not included in your tax return.

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

PIE income and Working for Families Tax Credits

Income from a PIE may not be included in taxable income and so it will not be:

  • shown on your tax return, or
  • included in your personal tax summary.

However it may need to be included in family scheme income for Working for Family Tax Credits purposes. PIEs whose investors' funds are not locked in need to notify the investor their income details by 31 May so Working for Families Tax Credits recipients can include this income on the Working for Families Tax Credits income adjustment form.

If the PIE income is already included in your taxable income then you do not need to show it on the adjustment form. However if your PIE income is included in your taxable income and the PIE fund is a locked-in fund then you can exclude the income for Working for Families Tax Credits using the same adjustment form.

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. Notified foreign investors cannot be treated as exiting investors and have the zero rate applied.

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 attributed income was excluded income, we will not send you anything relating to the income from your PIE. However if you are required to file an income tax return which includes taxable PIE income, we may 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 with different PIRs the investment will need to have the correct PIR applied to each person. This may mean splitting the investment.
all parties qualify for the same rate can select any holder's IRD number.

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.

However for the 2012 income year if the funds you have in the PIE are not in a locked-in fund such a KiwiSaver and similar retirement savings schemes or superannuation funds, the PIE income will affect your Working for Families Tax Credits. The PIE income must be included in family income and will need to be included on the Working for Families Tax Credits income adjustment form.

If the PIE income is already included in your taxable income then you do not need to show it on the adjustment form. However if your PIE income is included in your taxable income and the PIE fund is a locked-in fund then you can exclude the income for Working for Families Tax Credits using the same adjustment form.

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

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. Where all the investors are on the same PIR you can use that PIR and give one of the IRD numbers of the holders.

Choosing the PIR

To qualify for the 10.5% or 17.5% rates, all holders of the investment need to fit within the income requirements for that rate.

Each holder of the investment has to ensure that their share of the investment is taxed correctly. Where the PIRs for each holder are different you will need to give the PIE your individual PIRs and share of the investment. Find out your correct rate.

If you do not give the PIE a PIR the default tax rate of 28% will be applied as a final tax.

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

Tax calculated by the PIE at:

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

for individuals is a final tax, and you cannot get a refund even if your actual PIR would be 10.5% if you were to hold the investment yourself.

Note: this is the position for those still using the highest rate where there are only natural person investors.

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 any of the investors.

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

Where your PIE is not a multi-rate PIE they may continue to pay dividends. 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 excess tax credits

When a PIE's tax calculation for an investor results in there being excess tax credits, the PIE adjusts the investors interest for the amount of the excess.

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 and the correct PIR has been used, 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 28%, 17.5%, 0% and in certain cases 10.5% PIR.

Investors leaving or arriving in New Zealand before 1 April 2012

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

If you are ... and ... then you ...
an investor who has become a New Zealand resident before 1 April 2012 you have not previously invested in a PIE can use a PIR of 10.5% 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 28% from the date you leave New Zealand and tell the PIE of the change as soon as possible. From 1 April 2012 you may qualify to be a notified foreign investor.

If you become a new resident after 31 March 2012

New residents need to include their worldwide income when determining their PIR. However you may choose not to include your worldwide income when determining your PIR for either or both of the income years, if you reasonably expect that your taxable income in either of the first two years as a resident will be significantly lower than your total income from all sources for the income year(s). If you choose not to include your worldwide income the PIE income is no longer excluded income and must be included in your income tax return. The income will then be taxed at your marginal tax rate that may be higher than the 28% top resident PIR.

Before 1 April 2012 the PIR was only based on your income that was taxable in New Zealand.

 


Date published: 30 Aug 2011

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