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Income Tax Act 2007

Income - Exempt income

CW 39: Local authorities

You could also call this:

"Local authorities have some income that is exempt from tax"

Illustration for Income Tax Act 2007

You get exempt income from a local authority's sinking funds. A local authority's other income is also exempt. But this does not apply to income from being a trustee, except when it is distributed to a beneficiary as exempt income. You do not get exempt income from a local authority's income that comes from a council-controlled organisation, except for some organisations operating hospitals or water services that are exempt under section CW 55BC. This also applies to port companies, subsidiaries of port companies, or energy companies linked to the local authority, as explained in section 6(4) of the Local Government Act 2002. You do not get exempt income from a local authority's income that is not rates or a dividend. A local authority's income from being a port operator is not exempt, as defined in section 38(4) of the Port Companies Act 1988.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513263.

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Money and consumer rights > TaxesGovernment and voting > Local councils
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"Auckland Future Fund: a special fund where some income is tax-free for trustees."

Part CIncome
Exempt income

CW 39Local authorities

  1. An amount of income derived from sinking funds relating to the debt of a local authority is exempt income.

  2. Any other amount of income derived by a local authority is exempt income.

  3. Subsection (2) does not apply to an amount of income that a local authority derives as a trustee, other than an amount distributed as beneficiary income to a beneficiary who derives the amount as exempt income.

  4. Subsection (2) does not apply to an amount of income that—

  5. is derived by a local authority from—
    1. a council-controlled organisation linked by ownership or control to the local authority, other than a council-controlled organisation operating a hospital as a charitable activity on behalf of the local authority or a water organisation whose income is exempt under section CW 55BC; or
      1. an organisation linked by ownership or control to the local authority that is a port company, a subsidiary of a port company, or an energy company and that would be a council-controlled organisation in the absence of section 6(4) of the Local Government Act 2002; and
      2. is neither rates nor a dividend.

        1. Subsection (2) does not apply to an amount of income derived by a local authority in its capacity as a port operator from a port-related commercial undertaking. Port operator and port-related commercial undertaking are defined in section 38(4) of the Port Companies Act 1988.

        Compare
        Notes
        • Section CW 39(1) heading: replaced (with effect on 1 April 2008), on , by section 99(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
        • Section CW 39(2) heading: replaced (with effect on 1 April 2008), on , by section 99(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
        • Section CW 39(3): amended, on , by section 29 of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39).
        • Section CW 39(4): replaced, on , by section 57(1) (and see section 57(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).
        • Section CW 39(4)(a)(i): replaced, on , by section 35(1) (and see section 35(3) for application) of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).
        • Section CW 39 list of defined terms water organisation: inserted, on , by section 35(2) (and see section 35(3) for application) of the Local Government (Water Services) (Repeals and Amendments) Act 2025 (2025 No 43).