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Tax New Zealand: Correct an incorrect RIT value caused by the PIE tax credit or debit calculation

Steps to fix a Residual Income Tax value that's wrong because the PIR is blank or incorrect on an IR 3 return.

An incorrect Residual Income Tax (RIT) value may occur when the PIE tax credit/debit calculation is affected by an invalid Prescribed Investor Rate (PIR). If the PIR field is blank, an incorrect rate has been entered, or the related question has not been answered correctly, the calculation defaults to 0%, resulting in an incorrect RIT amount.

Correct the PIR in the PIE income section

You can correct the RIT value by checking the PIR and choosing the right rate for the calculation.

Follow these steps in the IR 3 return:

  1. Click the Calculation tab, then find field KP35, Portfolio Investment Entity (PIE) income.
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  2. Review the PIR retrieved from IRD field. If the field is blank, or if the rate shown is incorrect, answer No to the question:

    • Has the rate retrieved from IRD been used all year for all PIEs?

  3. Once you've answered No, use the Choose rate for calculation drop-down menu to select the correct PIR.

📌Note:

  • If the PIR retrieved from IRD field is blank and you answer Yes, the calculation uses 0% and produces an incorrect RIT value.

  • If the Choose rate for calculation field is left blank, the calculation defaults to 0% and produces an incorrect RIT value.

Check when the 0% rate applies incorrectly

The calculation uses 0% and produces an incorrect RIT value in the following scenarios:

Scenario

Result

The PIR retrieved from IRD is blank and you answer Yes.

The calculation uses 0%, which gives an incorrect RIT value.

The PIR retrieved from IRD is blank, you answer No, but you leave the Choose rate for calculation field blank.

The calculation uses 0%, which gives an incorrect RIT value.

📌Note: We're reviewing options to add validation for these fields in a future release.


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Follow the below:

Step 1: Locate the PIE Income Section

On the Calculation tab of the IR 3 return, go to field KP35 — Portfolio Investment Entity (PIE) income.

Step 2 — Check the PIR retrieved from IRD

Review the 'PIR retrieved from IRD' field. If the field is blank, or if the rate shown is incorrect, answer No to the question:

'Has the rate retrieved from IRD been used all year for all PIEs?'

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