How attributed income from the PIE can affect your tax liability
There may be tax implications if you:
- withdraw all or part of your investment
- change the class of the investment, or
- sell the shares in a PIE listed on the stock exchange.
Withdrawing all your investment
Certain PIEs have the option of paying the tax relating to the income for the period in which the exit occurs on the investor’s behalf. Other PIEs that are unable to calculate the tax can zero rate the income for the period.
If the PIE zero-rates the income, the trust should include the income in the tax return that includes the end of the PIE's income year when the withdrawal occurred.
| If the resident trustee has chosen a PIR of ... | and ... | then ... |
|---|---|---|
| 28% | the PIE calculates the tax at that PIR | the income does not have to be included your tax return. |
| 0%, or the PIE zero-rates the income as the result of a withdrawal | the income must be included in either the trust or beneficiaries' tax returns and any resulting tax liability paid. |
Withdrawing part of your investment
Certain PIEs can pay the tax for the period you withdraw your investment. If the tax calculation has been made at the 28% PIR, the income does not have to be included in the trust's tax return.
Changing the class of your investment
If the investor withdraws from an investor class and reinvests the funds in another investor class of the same entity, then the entity can treat the change of class as a partial withdrawal and calculate tax at that time.
Selling your shares in a PIE listed on the New Zealand stock exchange
If the trust has income from trading in shares, the gains on sale and any dividends received will be taxable. If the shares are held on capital account, and the trustee chooses to include the dividends in the trust’s tax return, any gains on sale will be tax free.
Dividends or distributions made by the PIE listed on the New Zealand stock exchange will be excluded income of the trustee if the trustee is a:
- New Zealand resident, and they do not include the amounts as income in their return, or
- non-resident and the dividend or distribution is fully imputed and/or fully credited for a foreign dividend payment.
Date published: 30 Aug 2011
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