Section HM 55D — Income Tax Act 2007: Requirements for investors in foreign investment PIEs

HM 55D Requirements for investors in foreign investment PIEs What this section does (1) This section applies to determine the treatment of a non-resident person who is an investor in a multi-rate PIE that chooses under section HM 71B to become a foreign investment PIE. This section overrides section HM 32(1) . Notification (2) If the person meets the requirements of subsections (3) and (4), they may notify the PIE that they wish to be treated as a notified foreign investor. Status requirements (3) The person must not be— (a) resident in New Zealand; or (b) a CFC; or (c) a FIF for which the item income interest in section EX 50(4) (Attributable FIF income method), for a person who is a New Zealand resident and the FIF, is 10% or more; or (d) a non-resident trustee of a trust that is not a foreign trust. Information requirements (4) The person must provide the PIE with the information set out in section 28D(1) of the Tax Administration Act 1994. Non-residents' rates (5) If the person does not meet the requirements of subsections (3) and (4), the PIE must treat them as a non-resident person to whom schedule 6 , table 1, row 2 (Prescribed rates: PIE investments and retirement scheme contributions) applies. PIE relying on notification (6) Despite subsection (5), the PIE may rely on the notification given by a person and treat them as a notified foreign investor in the following circumstances: (a) the person notifies the PIE that they wish to be treated as a notified foreign investor, but they have misrepresented their eligibility for notified foreign investor status: (b) the person is a notified foreign investor but becomes resident in New Zealand and does not advise the PIE of the change in status: (c) the person has notified the PIE that they are a notified foreign investor but do not in fact meet the requirements for that status. When status may be disregarded (7) The Commissioner may advise a PIE to disregard notification by an investor under subsection (2) if the Commissioner considers on reasonable grounds that the person does not meet or no longer meets the requirements of subsections (3) and (4). As soon as reasonably practicable after receiving the advice, the PIE must treat the investor as a non-resident person described in subsection (5). Cancelling status (8) A notified foreign investor who wishes to have their notified foreign investor status cancelled, must notify the PIE. The status may be cancelled at any time. Transitional residents (9) Despite subsection (3)(a), a transitional resident who is an investor in a foreign investment zero-rate PIE may choose the prescribed investor rate set out in schedule 6 , table 1, row 10. Defined in this Act: CFC , Commissioner , excluded income , FIF , foreign investment PIE , foreign trust , income interest , multi-rate PIE , non-resident , notified foreign investor , notify , resident in New Zealand , transitional resident , trustee Section HM 55D: inserted, on 29 August 2011 (applying for the 2012–13 and later income years for a foreign investment variable-rate PIE and a notified foreign investor in the PIE), by section 79(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).