Other issues affecting portfolio investment entities (PIE) when they cease

Deemed disposal and reacquisition of shares

On the date the PIE ceases to be a PIE it is also deemed to have disposed of and reacquired all shares in New Zealand and certain Australian-resident listed companies, at their market value. Income or loss that arises from this transition is included in the final return to include PIE income.

Any subsequent sales of shares will be subject to the usual capital/revenue distinction.

As a PIP does not make a transitional adjustment, no further adjustment to any income tax returns arising from cessation of the PIP needs to be made.

Becoming a PIE again after exiting

The PIE must not have ceased to be a PIE during the five years prior to the current election.

After the 5-year period an entity that qualifies to become a PIE can do so by completing the online registration process.

Filing an annual reconciliation if the PIE ceases

All MRPs that cease, including PIPs, except PIEs ceasing within 12 months, will be required to file an annual reconciliation within three months of cessation.

Issuing investor statements if the PIE ceases

A MRP ceasing after 12 months must still issue investor statements no later than 30 June following the date on which the PIE ceases.

Transitional adjustments made at the time of PIE commencement

Final tax due date

If you are required to file an income tax return or PIE periodic return to the date of cessation any tax liability arising in that return will be due by the usual due date. This includes any liability arising from the deemed disposal and reacquisition at market value required at the time of cessation.

Cancellation of credit balance in ICA account at the time of becoming a PIE

If you maintained an imputation credit account prior to becoming a PIE and any credit balance was cancelled, the balance will not be reinstated on cessation unless you ceased to be a PIE within 12 months.

Date published: 26 Feb 2010

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