Definition of the foreign PIE equivalent

The definition of a foreign PIE equivalent now includes an Australian managed investment trust provided it's not NZ resident. Applies from Nov 2012.

Section HM 3 of the Income Tax Act 2007

The definition of a foreign PIE equivalent has been amended to include an Australian managed investment trust (MIT), provided the MIT is not a New Zealand resident for tax purposes.

Background

A foreign PIE equivalent is, broadly, a non-resident entity that would be eligible to be a PIE if it were resident in New Zealand. Foreign PIE equivalents are able to hold 100% of a New Zealand-resident PIE, and vice versa.

MITs are subject to similar or more stringent investment and investor restrictions as New Zealand PIEs, and would therefore meet the definition of a foreign PIE equivalent. Including MITs within the definition of a foreign PIE equivalent reduces the continued compliance costs of PIEs monitoring whether a MIT meets the specific criteria of a foreign PIE equivalent.

Application date

The amendment applies from the date of Royal assent, being 2 November 2012.