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 prescribed investor rate for their trust. The trustees can choose either:

• 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 return
• 0% and have the income or loss and tax credits flow through to the trust's end of year 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 multi-rate PIE, PIE income will be taxed at the default rate of 28%. This default rate is not the same as notifying at 28%.

PIE income and end of year tax

A trust’s multi-rate PIE income must be included in an end of year tax return if:

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

Losses cannot be included in trust returns if you choose 10.5% or 17%.

If the trust and the multi-rate PIE have standard 31 March balance dates, they'll each include the income as paid or received in the same year's tax return.

Information handling

Dividends or distributions received from a multi-rate PIE are excluded income and are not included in the trust’s tax return.

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

For all other prescribed investor rates, including the default 28% rate, the income is included in the trust return. If applicable, it should be allocated as beneficiary income or remain as trustee income.