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How PIE income can affect your tax liability

There may be tax implications if you:

  • withdraw all or part of your investment
  • as a new resident you choose not to include your worldwide income when determining your PIR
  • change the class of the investment, or
  • gift the investment.

Withdrawing all of your investment

Certain PIEs have the option of paying on your behalf, the tax relating to the income for the period in which the withdrawal or exit occurs. Other PIEs that are unable to calculate the tax can zero rate the income for the period. They cannot zero rate on exit for notified foreign investors.

If ... then ...
the PIE calculates the tax at your correct PIR the income does not have to be included in your tax return.
the PIE zero rates the income you must include the income in your tax return and pay the resulting tax liability.

Withdrawing part of your investment

Certain PIEs can pay the tax for the period you withdraw your investment. If the tax calculation has been made at the correct PIR and is sufficient to meet the tax liability, the income does not have to be included in your tax return.

Paying the tax on investment withdrawals

This depends on the type of PIE that you have invested in, but generally your PIE will deduct the tax before returning the funds to you. However, certain PIEs are not able to calculate the tax during a quarter. In this case the income for that quarter may need to be included in your income tax return.

Changing the class of your investment

If you withdraw from an investor class and reinvest the funds in another investor class of the same PIE, then the PIE can treat the change of class as a partial withdrawal and calculate tax at that time.

Gifting your investments

If you ... and the PIE ... so then you ...
gift all or part of your investment, the disposition of the property may be considered a withdrawal
  • may zero rate the income in the period to the date of the gift
  • must include the zero-rated PIE income to the date of the gift*.
  • can calculate tax on the income to the date of the gift at the correct PIR
  • do not have to include the income in your tax return*.

*You may also be liable to gift duty.