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US Partnership investments 10% withholding tax from 1 Jan 23
US Partnership investments 10% withholding tax from 1 Jan 23

The IRS will introduce 10% withholding tax on the sale of US Partnership investments starting 1 Jan 23

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Written by Support
Updated over a week ago

Notice 4 Jan 2023:

Our US broker, DriveWealth, has let us know they have temporarily made PTPs inactive. DriveWealth explained this is temporary while they make some system changes to adjust for the new IRS tax for these investment types. During this time you will not be able to place orders for PTPs using your Hatch account, but if you wish to buy or sell, we can manually submit orders to DriveWealth to complete for you. Get in touch with any requests or questions.

US Partnership investments 10% withholding tax from 1 Jan 23

The US Internal Revenue Service is introducing a 10% withholding tax on the sale proceeds of US Publicly Traded Partnership (PTP) investments, effective 1 January 2023. This tax will apply to the total amount received from sales of any such investment, regardless of whether you make a gain or loss. This applies to most US Partnership investments available on Hatch.

What does it mean for me?

  • If you sell after 31 December 2022: You’ll pay 10% withholding tax when you sell any impacted investments. Our broker, DriveWealth, will withhold the 10% and pay the IRS on your behalf.

  • If you dispose of your holdings before 31 December 2022: Sales made prior to this date will not be subject to the new tax.

*IMPORTANT: The US markets close at 10 AM on 31 December 2022 New Zealand time. If you wish to sell, we recommend placing any orders well in advance to ensure they are filled before this cutoff.

How can I find out if a PTP Investment is exempt from this tax?

Most US PTP investments available on Hatch are subject to this 10% tax, however, some may have an exemption. The best way to know if a specific PTP investment is exempt or not is to determine whether the investment provider has issued a statement called a “Qualified Notice”, this indicates that the investment meets the IRS’s requirements for exemption.

It is important to note that exemptions can change over time so it is important you keep up to date if you hold any PTP investments.

How might it impact my tax reporting?

If you hold or sell an impacted investment at any time after 31 December 2022, you may be subject to additional tax reporting requirements with the IRS.

In your Hatch tax reports any PTP investment sales made after 31 December 2022 will show the additional US tax as part of the brokerage fee (see the 'Trades Data' file). The IRD has not provided any official guidance as to whether this tax can be claimed as a credit in your NZ return.

We recommend you get advice on your tax reporting obligations if you choose to hold an impacted investment after 31 December 2022.

List of US PTP investments - Last updated 20/12/22

PTP Ticker Symbol

PTP's Investor Relations or Tax Page

Notes

ET

EPD

UCO

UVXY

MPLX

BOIL

IEP

PAA

DBC

WEAT

MMP

AGQ

VIXY

CORN

ARLP

AB

EUO

NGL

BSM

SOYB

CEQP

USAC

GEL

GLP

NS

SUN

CQP

UAN

FTAI

UGL

SVXY

SPH

DCP

WES

SMLP

WLKP

HEP

DMLP

SCO

SIRE

DKL

CAPL

FUN

SPLP

CLMT

GBLI

KOLD

CODI

Currently exempt

NEP

Currently exempt

PBT

Currently exempt

NMM

Currently exempt

TYG

Currently exempt

KNOP

Currently exempt

CPLP

Currently exempt

DLNG

Currently exempt

AMLP

Currently exempt

USO

1446(f) exemption letter

GSG

1446(f) exemption letter

UNG

1446(f) exemption letter

BNO

1446(f) exemption letter

USCI

1446(f) exemption letter

CPER

1446(f) exemption letter

UGA

1446(f) exemption letter

USL

1446(f) exemption letter

BPYPM

1446(f) exemption letter

DBE

1446(f) exemption letter

DBP

1446(f) exemption letter

DGL

1446(f) exemption letter

DBO

1446(f) exemption letter

UUP

1446(f) exemption letter

DBA

1446(f) exemption letter

DBB

1446(f) exemption letter

*This list is subject to change and may not always be up to date. If you see a PTP with an exemption letter in the above table please review it yourself to make sure that the info provided is up to date.

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