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CC 6: Prizes received under Building Societies Act 1965
or “How prizes from building societies are taxed as income”
You could also call this:

“How non-monetary benefits for business loans are treated as income”

When someone lends you money for your business in New Zealand, you might give them something other than money as a thank you. This could be anything of value, not just cash. It doesn’t have to be interest, and it might not be something you can easily turn into money.

If this happens, and you would have had to pay interest on the loan if you hadn’t given this other thing, then the lender might have to count some money as income. They’ll need to figure out how much interest you would have paid if you had just borrowed the money normally. Then, they’ll subtract any actual interest you did pay. The difference is what they’ll count as income.

This only applies if your loan is a normal business deal. It has to be the kind where you would usually pay interest at the going rate for that type of loan.

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Next up: CC 8: Use of money interest payable by Commissioner

or “Interest paid to you by the Commissioner is counted as income”
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Part C Income
Income from holding property (excluding equity)

CC 7Consideration other than in money

  1. This section applies when—

  2. a lender provides money to a borrower for use in a business that the borrower carries on in New Zealand; and
    1. the borrower provides to the lender, as some or all of the consideration, a tangible or intangible benefit that—
      1. is not interest; and
        1. may or may not be relief from an obligation; and
          1. may or may not be convertible into money; and
          2. the borrowing is a commercial transaction under which the borrower would have been liable to pay interest at the current commercial rate, given the nature and term of the loan, if the borrower had not provided the benefit, whether or not the contract between the borrower and the lender provides for the payment of interest if the benefit is not provided.

            1. The amount described in subsection (3) is income of the lender.

            2. The amount is the interest that the borrower would have been liable to pay if the lender had lent the money to the borrower in consideration of the payment of interest at the current commercial rate, given the nature and term of the loan, reduced by the amount of any interest that the borrower pays.

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