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.
