Changes on Reporting PIE Income In Your Tax Return.

If you have investments in a Portfolio Investment Entity, there are certain changes in the way they are to be reported in your Income tax return from financial year 2021.

What is a Portfolio Investment Entity (PIE)?

An entity which invests the deposits or contributions from its investors in other passive investments. The most common ones are multi-rated portfolio entity, wherein all the income and losses are attributed by the entity to its investors.

PIE’s are a good investment vehicle for passive investments and provides a beneficial taxation regime.

How are PIE Income taxed?

For multi-rate PIE’s, tax is deducted at the prescribed investor rates of the investor, based on the investor’s taxable income. If a PIR (prescribed investor rate) is not provided, a default rate of 28% would be used.

What has changed?

Over the years, PIE income was not included in your personal tax return and was taxed at the PIR rate at source. If the tax was underpaid, the deficit had to be paid up but if the rate of deduction was higher, there was no refund.
Going forward however, the PIE income should be included in your individual income tax return. The taxable rate would still be PIR and not your marginal rate (tax % based on income), however the individual will now be able to claim a credit for the overpaid tax on PIE income.

The above article is does not constitute a tax advice and is only intended to be a general advice. If you would like to avail our services for questions related to your PIE investments, please reach out to us using the ‘contact us’ option.

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