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Industry guidelines Ngā aratohu ahumahi

Types of portfolio investment entity (PIE)

There are different types of PIEs that eligible entities may become.

Multi-rate PIE (MRP)

An MRP is a type of PIE that uses the investors' prescribed investor rates (PIRs) to calculate the tax on the investment income it earns from the investors' contributions.

An MRP is a company, superannuation fund or group investment fund that:

  • is eligible and has become an MRP, and has not ceased to be an MRP due to cancellation of registration or a breach of one or more eligibility requirements, and
  • is not a listed PIE (a company listed on a recognised exchange in New Zealand) that has not chosen to be an MRP, and
  • is not a benefit fund PIE, and
  • is not a life fund PIE.

Most PIEs fall into the MRP category.

MRPs must attribute income, losses and tax credits to investors and calculate and pay tax based on the PIRs notified by their investors.

The MRP may pay tax under one of these methods:

When MRPs ... then they ... Note
calculate tax quarterly file PIE periodic returns and pay tax quarterly (quarterly MRP). These MRPs can zero-rate investors that exit the MRP during a quarter.
calculate daily

file PIE periodic returns and pay tax:

  • monthly for investors who exit the MRP during the month, and
  • annually for the remainder of investors (exit MRP).
These MRPs do not zero-rate the exiting investors.
elect to pay provisional tax file income tax returns and pay provisional tax as usual.  

Listed PIEs, benefit fund PIEs and life fund PIEs, in contrast, do not attribute income to their investors and the investors in these entities do not provide PIRs.

New foreign investment PIEs

Two new types of multi-rate PIE have been introduced:

  • the foreign investment zero-rate PIE, and
  • the foreign investment variable-rate PIE.

The general PIE rules that relate to a multi-rate PIE relate to the two foreign investment PIE types. New Zealand investors and non-resident investors who do not notify the foreign investment PIE that they are notified foreign investors will continue to be treated under the normal PIE rules. 

These PIE types cannot elect to pay tax using the provisional tax option

Listed PIEs

A listed PIE is a type of PIE listed on a recognised exchange in New Zealand. In addition a company that is not listed on a recognised exchange may elect to become a listed PIE if it has:

  • 100 shareholders, and
  • resolved to become a company listed on a recognised exchange, and
  • applied to the Securities Commission for an exemption to disclose in a prospectus that it intends to become a listed PIE, and
  • satisfied the Commissioner of Inland Revenue that it has received the required consents and has applied to become a listed PIE.

A company that makes such an election then has two years from the effective date of the election to become listed on a recognised exchange in New Zealand. If it fails to do so, it will cease to be a listed PIE from the last day of the two-year period. The Commissioner may grant an extension if it is reasonable in the circumstances.

A company includes a unit trust.

Listed PIEs do not file PIE periodic returns or annual reconciliations and are required to continue to file income tax returns. Listed PIEs do not pass losses out to investors and may pay dividends. Dividends paid by a listed PIE that is not a life fund PIE are required to be fully credited to the extent permitted by the imputation credits available.

A listed PIE loses PIE status if it fails to fully credit dividends paid to the extent permitted by the imputation credits available.

A listed PIE can retain its PIE status for up to two years after it ceases to be listed on a recognised exchange if this cessation is part of a wind-up process. This is done by making an election, prior to delisting, that it will cease to be a PIE on a date that is up to two years from the date of delisting. The Commissioner can extend the time if it is reasonable in the circumstances.

By making an election, PIE status will be lost at the earlier of:

  • two years (or longer if the Commissioner considers it reasonable in the circumstances) from the date the listed PIE is delisted
  • the date specified in the election, or
  • when the number of shareholders reduces below 100.

If no election is made prior to delisting, PIE status is lost at the time a listed PIE ceases to be listed on a recognised exchange.

A PIE that is a listed company that elects to be a multi-rate PIE cannot be a listed PIE.

Benefit fund PIE

A benefit fund PIE:

  • is a registered superannuation scheme under the Superannuation Schemes Act 1989, and
  • must comply with section 15(1)(a) of that Act.

A benefit fund PIE is a type of PIE that:

  • does not attribute income to investors, and
  • is eligible and has become a benefit fund PIE, and
  • has not ceased to be a benefit fund PIE due to cancellation of registration or a breach of one or more eligibility requirements.

These types of PIE do not attribute income to investors. Therefore benefit fund PIEs cannot calculate their tax liability using the investors' prescribed investor rates. Benefit fund PIEs must become annual income tax filers.

Tax for benefit fund PIEs is at the basic income tax rate currently applying to the fund.

A defined contribution fund can be an MRP. However, where the fund is a hybrid, that is both a defined benefit fund and a defined contribution fund, the entity can become an MRP with the benefit fund and contribution fund being treated as different investor classes. The benefit fund as a separate investor class treats its income as retained by the PIE and taxed at 28%. The defined contribution class may be treated as an MRP.

Life fund PIE

A life fund PIE is a type of PIE that is part of a life insurer that:

  • holds investments subject to life insurance policies under which benefits are directly linked to the value of the investments, and
  • is eligible and has become a life fund PIE, and
  • has not ceased to be a life fund PIE due to cancellation of registration or a breach of one or more eligibility requirements.

Life fund PIEs are generally annual income tax filers though can become a multi-rate PIE and take on the responsibilities if they meet the requirements.

Foreign PIE equivalent

For the purposes of the PIE rules, a foreign PIE equivalent is an entity that is not resident in New Zealand, but if it was a New Zealand tax-resident, would be eligible to be a portfolio investment entity. That is, it is a widely held vehicle that holds investments in underlying companies and satisfies the eligibility requirements.

A PIE can hold up to 100% of a foreign PIE equivalent without breaching the entity shareholding investment requirement. Similarly, a foreign PIE equivalent can hold up to 100% of a PIE without breaching the maximum investor interest requirement.

Land PIE

A PIE with more than 50% of the value of one of its classes of investments in land has certain restrictions on the use of losses whereby the losses from the land class can only be offset against income from that same land class. Unused class land loss is "ring-fenced" and can only be carried forward for the purpose of reducing the amount of class taxable income of that particular class for a later attribution period. The class land loss cannot be used to offset class taxable income of another investor class. The investment must be in land, a resident land investment company or a holding of more than 20% in a non-resident land investment company.

Land PIEs can choose any of the four filing options. See note below.


However, where there are two or more companies, and one of them is an MRP, provided that:

  • the MRP owns 100% of the other companies, and
  • the other companies fall within the definition of "land investment company" (that is 90% of its investments are in land or land owning companies)

the companies are treated as being a group of companies.

Land investment company

A land investment company is a company that:

  • has on 80% or more of the days in a tax year, property with a market value of $100,000 or more, and
  • 90% or more of that property consists of interests in land or shares in a land investment, and
  • meets the income source requirement.

An investor class in a PIE may own shares in a land investment company. However a land investment company is not a PIE.

A change in the PIE rules ensures that where the PIE owns 20% or less of a non-resident land investment company, the loss, including foreign exchange losses relating to investments in land investment companies would be able to be attributed to investors and not have to be carried forward by the PIE. This change was introduced in July 2010 and backdated to 1 October 2007.

PIE investor proxies (PIP)

PIPs are also known as custodians, nominees or wrap accounts.

PIPs are not PIEs. They are intermediary nominees or agents through which investors can invest into a PIE. PIPs may perform the PIE's obligations where the PIE is an MRP and may take on the MRP's obligations on its investors' share of the income from various PIEs. We record custodians as PIEs to accommodate their PIE obligations.

A PIP can operate for a notified foreign investor in a foreign investment PIE if they choose and obtain the required information to complete the tax calculations and obligations.

How is a PIP taxed?

PIPs can generally adopt either the quarterly or exit options for filing returns. A PIP cannot apply the annual income tax option for its PIE income.

PIPs will file both income tax and PIE periodic returns. The income tax returns filed will account for the non-PIE income of the PIP.

Requirements to become a PIP

An entity must satisfy three requirements to become a PIP:

  1. They cannot become a PIP for an investor’s investment in a listed PIE. An investment in a listed PIE can be a part of the custodian's other investment activities.
  2. The entity must hold the investor interest in the PIE for a particular investor.
  3. The entity must give notice to the PIE that it is holding the investor interest as a proxy, along with any other information required by the Commissioner.

A PIP completes the prescribed registration form online - go to "Get it done online".

Responsibilities of a PIP

A PIP also has several responsibilities that it must adhere to. It must:

  • attribute the investor's attributed PIE income/losses for the period to the investor
  • distribute distributions and credits for the period to the investor
  • pay tax on investor attributed income for the period
  • adjust the investor interest, distributions or requests for funds to reflect the effect of the investor's PIR on the amount attributed
  • provide the Commissioner with returns relating to attributions, distributions, credits and payments
  • provide the Commissioner with any other information required
  • provide information to the PIE if it considers the investors it represents may cause the PIE to breach any of its eligibility criteria.
  • obtain the additional investor information (for notified foreign investors).

The PIE into which the custodian invests only holds one investor record for the custodian as a zero-rated investor.