Your tax return and your attributed income from your PIE

When your attributed income from your PIE is derived

Your attributed income from your PIE is derived in your income year which includes the end of the PIE's income year. Most investors and PIEs have the standard 31 March balance date so the income years align. See the following examples for non-standard balance dates:

If you have a...	and the PIE you invest in has a ...	then as the end of the PIE's 2012 income year falls ...
30 June 2012 balance date which is your 2012 income year	31 March 2012 balance date	within your 2012 income year, your income for the 2012 income year will include the attributed income from the PIE's 31 March 2012 income year.
31 December 2011 balance date, which is your 2012 income year	31 March 2012 balance date	after the end of your 2012 income year, the attributed income from the PIE for the year ended 31 March 2012 will fall in your 2013 income year.

When to complete a tax return

If you ...	then you ...	and file it by ...
already complete an IR3NR return	will continue to do so	the usual return filing dates.*
have previously not been required to file a tax return	must file an IR3NR tax return if you: receive zero-rated (non-excluded) attributed income from your PIE, or used the notified foreign investor PIRs when not entitled to	the usual return filing dates.*

*Unless you have an extension of time to file a tax return, filing dates are:

• 7th of the fourth month after the balance date for taxpayers with a late balance date (ie 1 April to 30 September), or
• 7 July following the end of the tax year for other non-resident taxpayers.

Including income attributed from the PIE in your tax return

You only include income attributed from your PIE in your tax return when it is treated as assessable (non-excluded) income.

If  ...	then ...
you have given the correct PIR to your PIE and you have not been taxed at a zero rate on exiting the PIE	you do not include the attributed income from your PIE in your New Zealand income tax return.
you have given a rate lower than your correct PIR	you must include the attributed income from your PIE in your tax return and pay tax based on your marginal tax rate.
you are an investor withdrawing your investment from a PIE that zero rates the income for a quarter	you must include the attributed income from your PIE in your tax return and pay tax based on your marginal tax rate.
your attributed income from your PIE is treated as excluded income	it will generally not be taken into account for student loans and child support calculations.

 

PIE income and foreign tax credits

Foreign tax credits are taken into account by the multi-rate PIE (MRP) when it calculates its tax liability. They can only be used to the extent of the New Zealand tax payable on the PIE attributed income.

Where your income attributed by the MRP has been taxed at a PIR of 0% on exit from the MRP, 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 attributed by the MRP.

Notified foreign investors have the 0% PIR applied to offshore income so they cannot use foreign tax credits associated to the income.

PIE income and New Zealand tax credits

New Zealand tax credits are taken into account by the MRP when it calculates its tax liability. They can only be used by the MRP to the extent of the New Zealand tax payable on the PIE attributed income.

Where you have been taxed at a zero rate by the MRP on exit, the amount of the attributed New Zealand tax credits flow directly to your New Zealand tax return.

Note however, that non-residents cannot claim imputation credits.

Imputation credits attached to dividends cannot be claimed as the dividend has 0% PIR. PIEs are entitled to an exemption from having RWT deducted so a credit should not normally arise.

Excess New Zealand tax credits and losses

Most MRPs that have excess New Zealand tax credits or losses in a tax calculation period receive a tax credit calculated at the investor's PIR.

The MRP then attributes the credit to the investor by adjusting their investor's interest in the MRP, or making a distribution to the investor, or adjusting a payment required from the investor.

This does not apply to notified foreign investors as they are not entitled to deductions. Also any loss is treated as zero.

At the end of the year

If the attributed income from your PIE ...	then ...	and your PIE ...
is not excluded income	it must be included in your tax return and you may have tax to pay depending on the nature of other income or loss and tax credits you may have	will send you a statement setting out the relevant details to be included in the return, and must issue this by the end of the month following the quarter you exited in.
is excluded income	the PIE will already have paid the tax on the income.

 

Date published: 30 Aug 2011

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