Income tax Dates
There are special rules for trusts that have income from PIE investments.
Prescribed investor rates
If a trust has invested in a multi-rate PIE, the trustees must choose a prescribed investor rate (PIR). This affects the way they pay tax and what is included in the trust’s IR6 end-of-year income tax return.
28% PIR
If using a PIR of 28%, it is a final tax.
17.5% PIR
If using a PIR of 17.5%, PIE income, PIE tax paid and tax credits should be included in the income tax return. Losses cannot be claimed, as the PIE receives a credit for the loss and increases the investor interest.
10.5% PIR
A PIR of 10.5% can only be used if the trust is from a will (testamentary trust). PIE income, PIE tax paid and tax credits should be included in the trust’s income tax return. Losses cannot be included, as the PIE receives a credit for the loss and increases the investor interest.
0% PIR
If a PIR of 0% is used, both income and losses should be included in the income tax return. The trust can also claim any available tax credits (for example, RWT or imputation).
No PIR provided
If the trust does not give the multi-rate PIE its PIR, it will be taxed at the default rate of 28%.
PIE income taxed at the default rate needs to be included in the trust’s end-of-year income tax return.
Superannuation funds and tax charities
Trustees of superannuation funds cannot use a PIR of 10.5%
Trustees of tax charities can only use a PIR of 0%.
Balance dates and income tax returns
If the trust and the multi-rate PIE both have a standard 31 March balance date, include the income in the tax return for the same year that it was received. If they have different balance dates, the PIE income should be included in the tax return for the income year that includes the multi-rate PIE’s balance date.
Dividends and distributions
Dividends or distributions from a multi-rate PIE cannot be included in the trust’s income tax return.
If a dividend or distribution is received from a listed PIE, the trust can choose to include it in its income tax return.
Beneficiary income from multi-rate PIEs
When a trustee invests in a multi-rate PIE, any PIE income passed to a resident individual beneficiary is treated as trust income and not PIE income, so it is not included in the individual’s PIE calculation.