Your portfolio investment entity (PIE) income may be taxed differently if you are not a New Zealand tax resident.
You can be a:
- notified foreign investor in a foreign investment multi-rate PIE
- non-resident investor in any multi-rate PIE
- non-resident investor in a listed PIE.
Notified foreign investors
Notified foreign investors’ investments in a foreign investment PIE can be taxed at a much lower rate.
To be a notified foreign investor, 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.
Becoming a notified foreign investor
You’ll need to tell the foreign investment PIE that you are a notified foreign investor and give:
- your full name
- date of birth
- home country address
- your IRD number equivalent (tax identification number).
A notified foreign investor can only apply to foreign investment PIEs.
Types of foreign investment PIEs
There are 2 types of foreign investment PIE – zero-rate and variable-rate.
Foreign zero-rate mainly has investments outside New Zealand.
Notified foreign investors investing in a foreign zero-rate PIE do not have to pay us tax on their PIE investment. Foreign variable-rate may have offshore and NZ-based investments. Notified foreign investors in this type of PIE are taxed at a PIR based on their county of residence, income types and sources.
An NFI can have multiple rates at the same time.
| Rates | Situation rate can be used for |
|---|---|
| 0% | All offshore income. |
| 0% | An amount from a New Zealand based financial arrangement that is not interest. |
| 0% | Fully imputed dividends when 28% tax has been paid by the company paying the dividend. |
| 1.44% | Interest income that comes from a New Zealand source. |
| 15% | Unimputed dividends or the portion of the dividend from New Zealand companies if you live in a DTA country. |
| 28% | Other New Zealand income, but the PIE cannot invest in New Zealand land or get income from land, including its disposal. |
| 30% | Unimputed dividends or the portion of the dividend from New Zealand companies if you live in a non-DTA country. |
What if you're not a notified foreign investor?
If you’re not a notified foreign investor, you need to advise the PIE a PIR of 28%. You cannot choose a lower rate.
PIE income or loss may be included in your income tax assessment for the year if you become or stop being a notified foreign investor during the year and did not apply the 28% non-resident rate.
Including income in your tax return
Income from a multi-rate PIE must be added in your non-resident tax return if you:
- Are not a notified foreign investor and used a PIR that's not 28%
- Are not a notified foreign investor and have been taxed at 0% (zero-rated) because you exited a multi-rate PIE during a quarter
- Have been incorrectly treated as a notified foreign investor.
Otherwise, you can leave the income out of your return.