What is a listed PIE? (Not answered)
I have been having some discussion on PIE tax treatment of investments on the PFI thread. Rather than bog that thread down 'off topic' I have decided to resurrect this one. I thought I would go to the official source, the IRD website, to get the definitive word on some of these tax matters. I am afraid that following the official site on PIE tax matters is not easy. Starting with the question: "What is a listed PIE?" Surely that would not be too difficult a question for the IRD to answer! Here is what they had to say.
From
https://www.ird.govt.nz/roles/portfo...estment-entity
Requirements for a listed PIE
1/ At least 90% of the entity’s income must be passive.
2/ Be or about to be listed on a recognised stock exchange in New Zealand.
3/ Have only one investment class.
4/ Investor interests must give the same rights to entity income.
5/ Full imputation credit.
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Aren't Kingfish a listed PIE? And aren't they active investors? If they are actively managing those funds it sounds like they are not a passive or index fund manager. So it sounds like Kingfish are not entitled to be a PIE! Who knew that? Being listed on an NZ exchange is important. But don't worry if you are not listed because you can claim you are 'about to be listed'! That is a good loophole to drive a truck through. I see that a PIE is only allowed 'one investment class'. So you can't have unit holders and warrant holders in the same PIE as an example. Anyone told Kingfish about that? "Investor Interests must give the same rights to equity income" I think this is saying that all of the PIE equity income must be shared in proportion to investor interests. But it is the equity income that gives the investor the interest - not the other way around. IRD have picked a very confusing way to denote things
Lastly we come to the final clanger, which looks relevant to the tax matter I am interested in: "Full imputation credit." What does that mean? There is no verb, and no declaration of what is the subject or object in this 'sentence'. Does the PIE give, take, or ignore imputation credits? Do they have to have them or not have them? The explanation provided here is completely without meaning or direction.
I don't have a clue what any of the requirements are for a listed PIE now that I have read the IRD introductory page. That page is pure drivel, nothing more.
SNOOPY
IR860: A guide 'FOR' PIEs
Quote:
Originally Posted by
Snoopy
I don't have a clue what any of the requirements are for a listed PIE now that I have read the IRD introductory page. That page is pure drivel, nothing more.
I am looking through the guide below, with my eye on information in regard to 'listed PIEs', which is one of four kinds.
https://www.ird.govt.nz/-/media/proj...20220119011852
Notes from the above link are below (I simply put the word 'listed' into the pdf 'document word search' and saw what came up.)
A 'listed PIE' (LP), a PIE that may be found on the NZX, is one of four PIE classifications and is not an MRP.
However an alternatively classified 'Multi-rate PIE' (MRP), an entity that contains a foreign investment PIE, can still be listed on an index in New Zealand, without being a classified 'listed PIE'.
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.
Listed PIEs may pay dividends. Dividends paid by a listed PIE are required to be fully credited to the extent permitted by the imputation credits available (IOW listed PIEs cannot choose not to pass tax credits on).
Unlike other PIEs, 'listed PIEs' are not required to provide quarterly reporting.
From p12 of this document there is a list of collective requirements for a 'listed PIE' that contain details that were absent from the 'drivel content list' from the post above:
"Passive income, (includes such things) such as dividends, interest and rent. For example: A company may run a supermarket. If its interest in the supermarket business equals or exceeds 10% (the investment type and income type requirements) of the total income of the
company, it cannot become a PIE."
From p14
Imputation credit requirement: All distributions to members of an investor class must be fully imputed for the purpose of establishing the available subscribed capital amount. The extent that imputation credits are available is determined by the directors of the entity.
An MRP cannot maintain an ICA (Imputation Credit Account).
'Listed PIE's must maintain an ICA.
From p19
Distributions or dividends from listed PIEs to shareholders
Distributions or dividends to New Zealand resident natural persons and New Zealand resident trustees that are shareholders in a listed PIE are excluded income unless the shareholder includes the dividend in their tax return. The amount of any distribution or dividend that is not fully imputed is also considered excluded income of the shareholder. These dividends are not liable for Resident Withholding Tax nor NRWT
From p54
"Where shares in a listed PIE are held as part of a share-trading business, any gains received on sale of the shares will be taxable, to an investor who is not a PIE."
Investor Expenses
Generally investor fees charged by the MRP in relation to an investor's interest in the MRP will be taken into account when it calculates the tax liability for the investor. The investor will not be able to claim the fees in their tax return.
SNOOPY