Portfolio listed companies - extension of time for listing on a recognised exchange

Currently PIEs that are not listed on a recognised exchange but intend to list, and demonstrate this intention by complying with a number of criteria, can elect to be a portfolio listed company.

Sections HL 12 and HM 18 of the Income Tax Act 2007; section HL 11B of the Income Tax Act 2004

Currently PIEs that are not listed on a recognised exchange but intend to list, and demonstrate this intention by complying with a number of criteria, can elect to be a portfolio listed company. This provides these companies with portfolio listed company tax treatment. The criterion that requires that the company actually lists on a recognised exchange within a certain timeframe has been amended to extend the time period from two to four years (from the date of election). This recognises that certain companies require an extended period as a result of the recent financial crisis.

Background

Section HL 12 of the Income Tax Act 2007 sets out the rules that allow an unlisted company to elect to become a portfolio listed company. The general rules in section HL 12 are that an unlisted company may choose to become a portfolio listed company provided it meets certain criteria, and it is listed on a recognised exchange two years after electing to become a portfolio listed company.

Key features

The section has been amended to allow an extension of time for companies that elect to become a portfolio listed company to list on a recognised exchange. The period of time has been extended from two years to four years provided that, before 2 July 2009, the company has resolved to become a company listed on a recognised exchange in New Zealand if it were to obtain the required consents, and it has applied to the Securities Commission for an exemption to disclose in a prospectus its intention to become a listed company.

Corresponding amendments have been made to section HM 18 of the rewritten PIE rules and to section HL 11B of the Income Tax Act 2004.

Application dates

The amendment to section HL 12 of the Income Tax Act 2007 applies for the 2008-09 and later income years.

The amendment to the Income Tax Act 2004 is effective from 1 October 2007, which is the date that the PIE rules started.

The change to subpart HM of the Income Tax Act 2007 applies for the 2010-11 and later income years to align with the start date of the rewritten PIE rules.