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  1. #11
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    A good table is included in this publication.

    https://www.ird.govt.nz/-/media/proj...20210201011148

    You do have to include PIE income with taxable income to calculate your PIR to ensure you fall below the applicable levels, 48000 and 70000.

  2. #12
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    Duplicate...
    Last edited by 777; 24-06-2021 at 04:41 PM.

  3. #13
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    Quote Originally Posted by 777 View Post
    A good table is included in this publication.

    https://www.ird.govt.nz/-/media/proj...20210201011148

    You do have to include PIE income with taxable income to calculate your PIR to ensure you fall below the applicable levels, 48000 and 70000.
    Thanks for that reference 777. It answers most questions if read carefully. However, I think the last line conclusion that you have made to your post is wrong. What your reference says is:

    "What is a prescribed investor rate (PIR)? The PIR for resident individuals is a prescribed rate based on your taxable income in the last two income years, eg, income from salary, wages and any additional sources of income you would include in your income tax return (1). PIE attributed income (2) will also be taken into account."

    (1) Generally you would not include PIE income in your income tax return, so it doesn't count towards determining your PIR.

    (2) If you declare PIE income in your tax return, that income is attributed to yourself, and must be included in any total income calculation to work out your indicative tax rate. However, if you just bank the PIE income into your bank account without putting it in your tax return, that income is not attributed to any particular person. All the tax calculations are made within the PIE fund, without reference to any particular person. I would argue that such income is not attributed to a person and so should not be included in any personal income calculation to determine your PIR, and hence IR3 tax obligations.

    SNOOPY
    Last edited by Snoopy; 24-06-2021 at 06:40 PM.
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  4. #14
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    Fact is you do not include PIE income in your tax return (IR3) unless there is an advantage to use the imputation credits. However to calculate your PIR you need to consider both taxable income and PIE income.

    eg if your taxable income is $10,000 (ie is under $14,000) and you have $37,999 PIE income then your PIE is 10.5%. But if your taxable income is $10,000 and PIE income is $38,001 then your PIR is 17.5%. The table in the guide reflects that.

  5. #15
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    This PIE income is very tricky. I do my 90 year old mothers tax return. She has a my IR I set up with IRD. She has a PIE investment with Fisher Funds and has a PIR of 17.5%. I notice the IRD includes PIE income in her my IR.

    As an aside I have been claiming expenses (monitoring and admin) for years as advised by her Fishers investment adviser. However this year she got a message from IRD saying the expenses were "denied" quoting a section of the Income Tax Act. I have been scrambling around trying to get a definitive answer from Fishers and others who should know. At this stage it looks as though the IRD may be right. Am not sure if they will go back and reassess past years tax returns! Does anyone on the forum have any experience/knowledge of this issue? Sorry I don't mean to hijack this thread.

  6. #16
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    This PIE income is very tricky. I do my 90 year old mothers tax return. She has a my IR I set up with IRD. She has a PIE investment with Fisher Funds and has a PIR of 17.5%. I notice the IRD includes PIE income in her my IR.

    As an aside I have been claiming expenses (monitoring and admin) for years as advised by her Fishers investment adviser. However this year she got a message from IRD saying the expenses were "denied" quoting a section of the Income Tax Act. I have been scrambling around trying to get a definitive answer from Fishers and others who should know. At this stage it looks as though the IRD may be right. Am not sure if they will go back and reassess past years tax returns! Does anyone on the forum have any experience/knowledge of this issue? Sorry I don't mean to hijack this thread.
    Last edited by herbert240; 24-06-2021 at 07:04 PM. Reason: duplicate

  7. #17
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    My guess is that the expense was due to PIE income and you were deducting it from taxable income.

  8. #18
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    Quote Originally Posted by Bev73 View Post
    The IRD web site and the dividend advices inform me that I have the option of declaring, or, not declaring the PIE income.
    This implies that I can "cherry pick" which PIE dividends I include on my IR3. I assume, however, that is not true once the $70,000 threshold is breached. I am not there yet, so, the 2021 IR3 was fine.

    There may be some enlightening articles on the net, but I have not, as yet, located them.
    I may have put you wrong here Bev. Where on the IRD website does it state that you have the option of declaring or not declaring your PIE income? There are apparently new tax regulations from the beginning of the FY2021 tax year.

    https://www.ird.govt.nz/updates/news...-31-march-2021

    "This is a reminder that from the 2021 income tax year, portfolio investment entity (PIE) income must be included in all individual income tax returns."

    That reference is dated 3rd May 2021, so this change in policy is very recent. If all PIE income must now be included in your IR3, the discussion on which classes of income should be included when calculating your PIR number becomes moot, because all PIE income now must be included in your tax return!

    Looking at my own IR3 for FY2021, which I have yet to complete, I see there is a new question Q36, requesting information on my PIE income. So you do have to declare it, although it looks like it lies outside of the rest of your income tax calculations.

    SNOOPY
    Last edited by Snoopy; 24-06-2021 at 08:54 PM.
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  9. #19
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    Quote Originally Posted by 777 View Post
    Fact is you do not include PIE income in your tax return (IR3) unless there is an advantage to use the imputation credits. However to calculate your PIR you need to consider both taxable income and PIE income.

    eg if your taxable income is $10,000 (ie is under $14,000) and you have $37,999 PIE income then your PIE is 10.5%. But if your taxable income is $10,000 and PIE income is $38,001 then your PIR is 17.5%. The table in the guide reflects that.
    For those wondering about calculating their correct PIR rate, I suggest they look here

    https://www.ird.govt.nz/pir

    It does look like 777 is correct for FY2021 at least.

    As for previous years, I think the documentation in IR855-2020 is ambiguous, given the different views on this topic expressed on this thread. Yes I can see the table says include 'your' taxable income and 'your' PIE income. But up until the start of FY2021 PIE income was not regarded as 'your' income for income tax purposes, unless you specifically chose to include it. So I would argue that undeclared PIE income is not 'your' income because it is not recognised as such by the IRD and so should not be included in any PIR calculation. To support my view, I note the instructions in IR855-2020:

    "income from salary, wages and any additional sources of income you would include in your income tax return."

    Now I ask the counter factual question, what sources of income are not included in your tax return? The only form of income I can think of that it is legal not to include in your tax return (prior to FY2021 at least) was PIE income. So I take this quote as a specific instruction NOT to include it UNLESS you choose to declare it, which is where the next sentence comes in.

    "PIE attributed income will also be taken into account."

    That means that if you choose to attribute this PIE income to yourself, it must be included. But if you don't (i.e. you leave it out of your tax return) the PIE income remains excluded for PIR calculation purposes. If anyone can see a flaw in my interpretation of what has been written in IR855-2020 please enlighten me. Until then I shall regard my interpretation of how to calculate PIR, historically, as correct.

    SNOOPY
    Last edited by Snoopy; 24-06-2021 at 08:59 PM.
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  10. #20
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    Quote Originally Posted by 777 View Post
    My guess is that the expense was due to PIE income and you were deducting it from taxable income.
    I am still a bit confused 777. Adviser from Fishers says "The PIE system will take the taxation at your prescribed PIR rate and deduct from the figure the amount of fees that have been paid" I guess this means I have been "double dipping" and should not have claimed expenses resulting in refunds?

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