Adding Quayside Holdings to schedule 29

Schedule 29 of the Income Tax Act 2007

Quayside Holdings Limited, the investment arm of the Bay of Plenty Regional Council, has been added to schedule 29, which means its investments are exempt from some of the PIE eligibility criteria.

Background

Normally an entity can only own up to 20% of a PIE and there must be at least 20 investors in a PIE. The rationale for these restrictions is to ensure that PIEs are widely held, so a single investor cannot dominate the actions of a PIE. Entities listed in schedule 29, however, can hold up to 100% of a PIE and can be a PIE's sole investor. This is on the basis that these entities are themselves widely held. The PIE will therefore, in effect, still be widely held even if one such entity has a significant interest in it.

Quayside's investments are held for the benefit of the Bay of Plenty Regional Council's ratepayers. In this sense Quayside is widely held, and it is appropriate for it to be added to schedule 29.

Application date

The amendment applies from the date of Royal assent, being 2 November 2012.