Ngā kaitiaki me ngā hinonga kohinga haumi Portfolio investment entities and trustees

There are special tax rules for trustees that invest in portfolio investment entities (PIEs).

Prescribed investor rates (PIR) for trusts

Trustees who are New Zealand tax residents and who invest in a multi-rate PIE (MRP) must collectively choose 1 PIR for their trust from the following options.

• 28% as a final tax.
• 17.5% and include PIE income and tax paid in the end of year income tax return.
• 10.5% only if the trust is testamentary (from a will) and include PIE income and tax paid in the end of year income tax return.
• 0% and have the income or loss and tax credits flow through to the trust's end of year income tax return.

Trustees of superannuation funds cannot choose 10.5%.

Trustees of charitable trusts can only notify 0%.

If the trust does not provide a prescribed investor rate to the MRP, PIE income will be taxed at the default rate of 28%. This default rate is not the same as notifying at 28%. The PIE income must be included in the trust’s end of year income tax return.

PIE income and end of year income tax return

A trust’s MRP income must be included in an end of year income tax return if the:

• trustees chose a prescribed investor rate of 0%, 10.5% or 17.5%
• trust has been zero-rated (taxed at 0%)
• default rate of 28% was applied.

Losses cannot be included in trust returns if you choose 10.5% or 17.5%.

If the trust and the MRP both have a standard 31 March balance date, the income is received and attributed in the same year's tax return. If they have different balance dates, the trust includes the income in the tax return for the year the end of the PIEs balance date falls in.

Information handling

Dividends or distributions received from an MRP are excluded income and are not included in the trust’s income tax return. A dividend from a listed PIE is excluded income unless the trustees choose to include it in the trust’s income tax return.

If a trust’s income is taxed at the notified 28% PIR, it is not included in the income tax return.

For all other PIRs, including the default 28% rate, the income is included in the trust’s income tax return.

The trustees then determine if it should be allocated as beneficiary income or remain as trustee income.

If allocated as beneficiary income by a trust that is not a PIE, it is taxed at the beneficiary’s marginal tax rate with a credit allowed for the PIE tax paid. The PIE income is not included in the PIE calculation in the individual’s income tax return or assessment.