Overseas investors can be non-resident investors or notified foreign investors (NFI).
Prescribed investor rates (PIRs) for non-residents
The PIR for non-residents (individual or entity) who are not NFI is 28%. You cannot choose a lower rate.
Transitional residents can use a 0% PIR if they invest in a zero rate portfolio investment entity (PIE).
If an investor notifies the multi-rate PIE (MRP) of a change due to them becoming or ceasing to be an NFI during a year there are a number of potential scenarios the PIE needs to consider. Refer to the guide for PIEs (IR860) under investor changes residence.
Income attributed by the MRP
Your MRP income must be included in your tax return if you have:
- Applied a PIR lower than your correct PIR.
- Had a zero-rate applied due to a quarterly exit.
- Chosen not to include your worldwide income as a new resident.
Dividends or distributions from an MRP are excluded income. These are not included in your tax return.
If an investor exits an MRP that files quarterly, any residual interest will be paid to us. This residual interest will be paid within one month of the quarter end for the exit period. The investor will be entitled to a tax credit equal to the residual interest paid.
Notified foreign investors
Non-residents who hold an investment in a foreign investment PIE can notify the PIE that they want to be a notified foreign investor. The investor must not be:
- resident in New Zealand
- a controlled foreign company
- a non-resident trustee of a New Zealand trust
- a foreign investment fund with a New Zealand resident who has income interest of 10% or more.
The investor will need to provide their date of birth, home country address and their IRD number equivalent.
PIRs for notified foreign investors are determined by the foreign PIE they invest in.