KFL - discount to diluted NAV

[Snoopy]

I have just received my IR3 completed by the IRD. It is exactly as I had worked out. The only reason that the PIE income is recorded on it is for the IRD to check you are using the correct PIR. It otherwise plays no part in your return. Listed PIEs are not included as the PIR is at the maximum of 28c. As I stated if you have a gross income of less than $48,000 (including any KFL you wish to add in) then you can claim the imputation credit against your income.

The above sounds right to me, although I think there is some ambiguity in the wording used. If the tax deducted from your PIE income is too high, then you can claim the over-payment of tax back. But that calculation is done by using the calculation page in the tax guide under the reference material for Question 36 in the IR3G tax guide for FY2023. The PIE tax reassessment is a ring fenced self contained calculation.

"Copy the amount in Box 5 (calculation sheet in your guide) to Box 36C of your return (part of the IR3 form itself), if you are entitled to a refund of PIE tax enter a minus sign at the end of the cents box."

You then go onto the worksheet attached to Question 37 from the IR3G guide, where you use your overall income level to calculate your tax liability. But, and here is the important bit, the PIE income you earn plays no part in your assessable tax rate - NONE!

Now if you are due for a PIE tax refund, you do this in the Question 37 work sheet in box 11. Note again that the refund number you write in here bears no connection to any of your non-PIE income, nor any taxes deducted from any other income source. Your PIE income, and the tax deducted from that, is completely ring fenced and self contained. You do not generally claim a PIE tax refund by declaring that PIE income in the dividend section of your tax return. There is no need to do such a thing.

If it is over the $48,000 then it will cost you the difference in you marginal rate and the 28c on KFL gross dividend declared and the only place to get the imputation credit is to include it in the dividend section.

I am retired as well and know they are no use to me as I am well in excess of $48,000.

Yes but if your income is over $48k why would you try to 'get' your imputation credit by shifting income from your 'PIE box' to your 'dividend income' box? All that would do would be to increase your tax bill for those PIE earnings from 28% up to your marginal tax rate for no reason. That would be the opposite of tax avoidance, which would be such a rare thing I am not sure it even has a name - tax stupidity perhaps?

SNOOPY