Attributed income from a PIE and your tax return
When income attributed by a PIE has to be included in the partnership's/partner's tax return
PIEs that attribute income to investors and calculate tax using the investor’s PIR are known as multi-rate PIEs (MRP).
Income attributed by the PIE must be included in your income tax return if:
- you are a resident individual partner/holder who has applied a PIR that is lower than your correct PIR, or
- you are a resident individual partner/holder who has had a zero rate applied in a quarter on exit from a MRP that files quarterly, or
- you are a partner/holder that is a zero-rated investor such as a company or a trustee that has elected a PIR of 0%, 10.5%, 17.5%, or
- you are a resident trustee who has had the default rate of 28% applied, or
- you are a resident individual or trustee who has elected to include a dividend from a listed PIE, or
- certain dividends or distributions from a listed PIE are received by a company as an investor.
You will continue to file your partnership and partner/holder tax returns by 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 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 taxpayers with other balance dates.
When your attributed income from the PIE is derived
Your attributed income from the PIE is derived in your income year which includes the end of the PIE's income year. See the following examples.
| 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 up to 31 March 2012. |
| 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 into your 2013 income year. |
PIE income and foreign tax credits
For partners/holders taxed at a zero rate, foreign tax credits available will generally be the lesser of:
- the amount of the attributed credits, and
- the amount calculated by multiplying the attributed income by the investor's tax rate.
The foreign tax credits can be claimed in the tax return up to the amount of the tax you are required to pay on the income attributed by the MRP.
For individual partners/holders, where income attributed by the MRP has been taxed at a PIR of 10.5%, 17.5% or 28%, the foreign tax credits are taken into account by the MRP when it calculates its tax liability.
PIE income and New Zealand tax credits
For partners/holders taxed at a zero rate, the amount of the attributed New Zealand tax credits flow directly to the investor. Limitations to the credits able to be claimed may arise in the investor's income tax return.
For partners/holders taxed at a PIR of 10.5%, 17.5% or 28% New Zealand tax credits are taken into account by the MRP when it calculates its tax liability.
Excess New Zealand tax credits and losses
For partners/holders taxed at a PIR of 10.5%, 17.5% or 28%, 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 interest in the MRP, or making a distribution to the investor, or adjusting a payment required from an investor. A zero-rated investor does not have an entitlement to rebates at the MRP level.
PIE investments in overseas markets
If your investment in the PIE is in overseas markets, you do not have to include this for the purposes of the foreign investment fund (FIF) rules. Any calculations under the FIF rules will be made by the PIE.
Date published: 06 Sep 2011
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