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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.