Announcements
PUBLISHED 31 March 2010

Law change for PIE timing rules

The Government is to introduce legislation to clarify the timing rules for portfolio investment entities claiming a tax deduction for credit impairments or doubtful debts. For more information see the media statement.


Hon Peter Dunne
Minister of Revenue

Wednesday, 31 March 2010

Media Statement

Dunne: law change to clarify PIE timing rules

The Government will introduce legislation later this year to clarify the timing rules for portfolio investment entities (PIEs) claiming a tax deduction for credit impairments or doubtful debts, Revenue Minister Peter Dunne announced today.

"Consultation with the industry indicates that there is considerable uncertainty over when a PIE can claim these deductions," Mr Dunne said.

The PIE rules have their own timing rule for income and tax deductions which allocates the PIE's income and deductions to the period when these amounts are reflected in its unit price, usually on a daily basis. This prevents the fund from being required to make complex provisions for future tax liabilities and deductions in the fund's unit price.

"The Government intends to introduce several technical amendments to the PIE rules to clarify that a tax deduction for credit impairment or doubtful debt provisions is available when they apply a market valuation to their financial arrangements, and ensure that PIEs are able to pro-rate other income and tax deductions such as fund administration costs to account for investors moving in and out of the PIE," Mr Dunne said.

"This treatment is consistent with the approach for dealers under the financial arrangement rules, which allows them to adopt a market value option, which effectively allows a deduction for credit impairments which impact on the market price," he said.

Mark Stewart | Press Secretary | Office of Hon Peter Dunne
Cell +64 21 243 6985