Allocated income from a PIE and your tax return
When income allocated by a PIE has to be included in the partnership's/partner's tax return
Income allocated 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 the actual PIR, or
- you are a resident individual partner/holder who has had a zero rate applied in a quarter on exit from a PTRE that files quarterly, or
- you are a partner/holder that is a zero-rated portfolio investor such as a company or a trustee that has elected a PIR of 0%, or
- you are a resident trustee who has had the default rate of 30% applied, or
- you are a resident individual or trustee who has elected to include a dividend from a portfolio listed company, or
- certain dividends or distributions from a portfolio listed company 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 allocated income from the PIE is derived
If you have a balance date other than 31 March, your allocated income from the PIE is derived in your income year which includes the end of the PIE's income year to which your income relates. See the following examples.
| If you have a ... | and ... | then ... |
|---|---|---|
|
30 June 2009 balance date which is your 2009 income year |
the PIE you invest in has a 31 March 2009 balance date |
as the end of the PIE's 2009 income year falls within your 2009 income year, your income for the 2009 income year will include the allocated income from the PIE up to 31 March 2009. |
|
31 December 2008 balance date, which is your 2009 income year |
the PIE you invest in has a 31 March 2009 balance date |
as the end of the PIE's 2009 income year falls after the end of your 2009 income year, the allocated income from the PIE for the year ended 31 March 2009 will fall into your 2010 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 allocated credits, and
- the amount calculated by multiplying the allocated 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 allocated by the PTRE.
For individual partners/holders, where 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.
PIE income and New Zealand tax credits
For partners/holders taxed at a zero rate, the amount of the allocated 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 19.5% or 30%, New Zealand tax credits are taken into account by the PTRE when it calculates its tax liability.
Excess New Zealand tax credits and losses
For partners/holders taxed at a PIR of 19.5% or 30%, most PTREs 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 PTRE then allocates the credit to the investor by adjusting their portfolio investor interest in the PTRE, or making a distribution to the investor. A zero-rated investor does not have an entitlement to rebates at the PTRE 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: 29 Jul 2008
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