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A portfolio investment entity (PIE) is a type of entity, such as a managed fund that invests the contributions from investors in different types of investments.
New tax rules have allowed eligible entities to become PIEs since 1 October 2007.
Eligible entities that elect to become a PIE will generally pay tax on investment income based on the prescribed investor rate (PIR) of their investors, rather than at the entity's tax rate.
Income earned through a PIE will generally not affect investors' entitlements to Working for Families Tax Credits (WfFTC), or their student loan or child support obligations.
However from 1 April 2011 if the funds you have in the PIE are not locked in a fund such as in a KiwiSaver and similar retirement scheme or superannuation funds, the PIE income will affect your WfFTC. The PIE income must be included in family income and will need to be included on the Adjust your income (IR215) form.
From 1 April 2014 PIE income that is not in a locked-in PIE will also need to be included for student loans.
If you have declared your locked-in PIE income in your tax return then you can exclude it for Working for Families Tax Credits and student loan purposes.
Two new types of foreign investment PIEs have been introduced:
The treatment of New Zealand resident investors in these new PIEs will not change. However, if you are a transitional resident and invest in a foreign investment zero-rate PIE, you may qualify for the 0% PIR. The rules for investors who become residents from 1 April will also change.
Entities that meet the eligibility requirements can elect to become a PIE if they are a:
To find out more about the types of PIEs, please read Portfolio investment entities (PIE).
We cannot comment or provide advice on investment schemes. You should talk to your tax agent or financial adviser.
You don't have to keep records for excluded income.
If the PIE income is not excluded income because:
then you must keep your records relating to that income for seven years.