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If you're an overseas investor, you can either be a

  • notified foreign investor
  • non-resident investor.

Portfolio investment entity (PIE) income is taxed differently depending on your situation.

Notified foreign investors

If you're a non-resident who holds an investment in a foreign investment PIE, you can notify the PIE you want to be a notified foreign investor (NFI).

To be an NFI, you cannot be:

  • resident in New Zealand
  • a controlled foreign company
  • a non-resident trustee of a New Zealand trust
  • a foreign investment fund with a New Zealand resident who has an income interest of 10% or more.

You'll need to provide your full name, date of birth, home country address and your IRD number equivalent.

Prescribed investor rates (PIRs) for non-residents

If you're an NFI in a foreign investment variable-rate PIE, you must use the prescribed investor rate (PIR) applicable to the income types and sources.

If you're an NFI in a foreign investment zero-rate PIE, you must use the 0% PIR. 

If you tell your multi-rate PIE (MRP) that you've either become a notified foreign investor or stopped being one during a year, the PIE income or loss may be included in your income tax assessment for the year. There are a number of potential scenarios the PIE needs to consider. Refer to our ‘Portfolio investment entity guide – IR860’ under the heading 'Investor changes residence'.

If you're a non-resident (individual or entity) and are not a notified foreign investor, then your PIR is 28%. You cannot choose a lower rate.

Multi-rate PIE income and your tax return

Income from an MRP must be included in your tax return if you:

  • used a PIR that's too low
  • have been taxed at 0% (zero-rated) because you exited an MRP during a quarter, except for NFIs of a foreign investment PIE
  • have been incorrectly treated as an NFI.

Dividends or distributions from an MRP are excluded income. This means they’re not included in your end-of-year tax return or assessment.

If you exit an MRP that files quarterly, any remaining interest may be paid to us instead. We'll be paid the interest within a month after the end of the quarter that you exited in. You'll be entitled to a tax credit for this amount in your annual income tax return or assessment.

Last updated: 14 Jul 2021
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