General comments on rewrite of PIE rules

Issue: Terminology used in PIE rules

Submission

(31 – NZ Funds, 32 – KPMG, 33 – Investment Savings and Insurance Association of NZ Inc, 62 – Minter Ellison Rudd Watts)

The terminology used in the current PIE rules should not be changed as the current terms are now commonly understood. In addition, changes to the terminology in the legislation will require changes to PIE documentation which will result in extra costs.

Comment

The rewritten PIE provisions in the current tax bill are the last of the major parts of the Income Tax Act to be rewritten.

Officials have recommended (see below) that the rewritten PIE rules be deferred until 1 April 2010 to prevent retrospective application. This deferral will provide time for the managed fund industry and Inland Revenue to change the relevant terminology for written material. This should alleviate some of the submitters’ concerns.

Recommendation

That the submission be declined. 

Issue: Application date of rewritten PIE rules

Submission

(Matter raised by officials)

The application date for the rewritten PIE rules should be deferred from 1 April 2009 to 1 April 2010.

Comment

The Minister of Revenue has written to the Chair of the Committee requesting that the application date for the rewritten PIE rules be deferred from 1 April 2009 to 1 April 2010.

The PIE rules operate on a tax-year basis, that is, from 1 April each year. Because this bill will be enacted after 1 April 2009, it is highly desirable for the rewritten PIE rules to be deferred until 1 April 2010 to prevent them having any retrospective application.

Recommendation

That the submission be accepted.