Now is a good time to check that you have advised your portfolio investment entity’s (PIEs) of the correct notified investor rate (NIR) for any PIE investments that you may have.
The notified investor rate is the tax rate that a portfolio investment entity uses to calculate the tax you have to pay on a PIE investment.
If the wrong NIR is used it can result in an unwanted tax bill at the end of the year or it can result in an investor paying more tax than they need to.
To calculate your NIR it is necessary to look at your income, both taxable and PIE income, for the two years before the commencement of the income year to which the NIR is to be applied.
Thus calculating your current NIR requires looking at your income for the 2011 and 2012 year .
An individual’s NIR for the current period can be worked out as follows:
|Taxable income in either of the previous two years (2011 & 2012)||Taxable income and PIE Income in either of the previous two years (2011 & 2012)||NIR %|
|Less than $14,000||Less than $48,000||10.5%|
|Less than $14,000||$48,001 to $70,000||17.5%|
|Less than $14,000||Greater than $70,001||28%|
|$14,001 to $48,000||Less than $70,000||17.5%|
|$14,001 to $48,000||Greater than $70,001||28%|
|Greater than $48,000||–||28%|
Other NIR Considerations for an Individual
- No NIR Elected- If no NIR is elected then the default rate of 28% applies.
- Joint Investments – Where investments are jointly held by individuals the highest NIR of the joint investors is applied.
- Non-Resident Individual – The NIR for a non-resident individual is 28% (the default rate). However non-resident investors that are a Notified Foreign Investor in a zero-rated PIE, will have a 0% NIR.
- Listed PIEs – Listed PIEs are companies listed on the New Zealand stock exchange, a flat NIR of 28% applies to listed PIEs.
We are happy to help if you need any assistance in calculating your NIR. Please contact your UHY Partner for more information.