If you're an overseas investor, you can be a non-resident investor or a notified foreign investor (NFI).
Portfolio investment entity (PIE) income is taxed differently depending on your situation.
Prescribed investor rates (PIRs) for non residents
If you're a non-resident (individual or entity) and you are not a notified foreign investor, then your prescribed investor rate is 28%. You cannot choose a lower rate.
If you're a transitional resident and you invest in a zero rate portfolio investment entity (PIE), then you can use a 0% prescribed investor rate.
If you tell your multi-rate PIE (MRP) that you've either become a notified foreign investor or stopped being one during a year, then there are a number of potential scenarios the PIE needs to consider. Refer to Portfolio investment entity - a guide for PIEs - IR860 under 'investor changes residence'.
Multi-rate PIE income and your tax return
Your multi-rate PIE income must be included in your tax return if you have:
- used a prescribed investor rate that's too low
- been taxed at 0% (zero rated) because you exited a multi-rate PIE during a quarter
- chosen not to include your worldwide income as a new tax resident.
Dividends or distributions from a multi-rate PIE are excluded income. They are not included in your end of year tax return.
If you exit a multi-rate PIE filing quarterly, any remaining interest will 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 equal to the interest we were paid.
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.
You must not 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 income interest of 10% or more.
You'll need to provide your date of birth, home country address and your IRD number equivalent.
If you're a notified foreign investor, then your foreign PIE will choose your prescribed investor rate.