Remedial changes to the PIE rules

2012 technical and editorial changes to the portfolio investment entity (PIE) rules.

A number of technical and editorial changes have been made to clarify the PIE rules, including:

  • Section HM 14(1) has been amended to refer to a "listed PIE" instead of "a company listed on a recognised exchange in New Zealand".
  • Foreign investment PIEs are not allowed deductions for expenses or credits in relation to "notified foreign investors". It has been clarified that this treatment also applies to transitional residents who have elected a zero percent tax rate with the PIE.
  • Section 57B of the Tax Administration Act 1994 has been amended to ensure that foreign investment zero-rate PIEs are not required to file a return with Inland Revenue for exiting investors if the only exiting investors are notified foreign investors. Information relevant to exiting notified foreign investors should be included in the end-of-year return that the PIE is required to provide to Inland Revenue.
  • Section HL 21(13) has been amended to correctly refer to an investor's prescribed investor rate, and not to their portfolio investor rate in both 2004 and 2007 versions of the Income Tax Act, with application from 1 October 2007 and 1 April 2008, respectively.
  • The erroneous reference to "an exiting investor referred to in section HM 61" has been removed from the definition of "zero-rated investor".
  • The rule that provides how a PIE should allocate tax credits has been amended to correctly apply to all types of credit, other than PIE-specific credits.
  • The references to "tax year" and "income year" in section HM 34 have been corrected, with application from the beginning of the 2011-12 income year.
  • Sections HM 51(1)(b) and HM 53(1)(b)(ii) have been amended to provide that transitional residents that have elected a zero tax rate cannot benefit from certain tax credits.
  • Section HM 32(3) has been re-worded (with effect from the date of enactment), while sections 64(3) and 65(5) have been amended (with effect from the date of enactment of the Taxation (Tax Administration and Remedial Matters) Bill to clarify the policy intent.

Application date

These amendments apply from the date of Royal assent, being 2 November 2012, unless otherwise stated.