Plain language law

New Zealand law explained for everyone

Income Tax Act 2007

Taxation of certain entities - Other entities

HR 5: Airport operators: general

You could also call this:

“Tax treatment of joint venture airport operators”

When an airport is run as a joint venture between the Crown and a local authority, it’s treated in a special way for tax purposes. You can think of the airport operator as if it were a company, even though it’s not really one.

The people involved in the joint venture are treated as if they own shares in this ‘company’. The number of shares they’re treated as owning depends on how much of the profits they get from the joint venture.

The airport operator is considered to be its own separate entity. This means it’s treated as separate from the Crown, the airport authorities, and anyone else involved.

Even though the Crown and a local authority are involved, the airport operator isn’t considered to be a public authority or a local authority.

The airport operator isn’t treated as a mutual association, which is a special type of organisation where members work together for a common purpose.

If the people involved in the joint venture give money to the airport operator for its activities, and they all agree that this money is like a loan with interest, then it’s treated exactly like that - as if the airport operator borrowed money and is paying interest on it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1517664.

Topics:
Money and consumer rights > Taxes
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“Rules for airport operators' ownership and valuation of assets”

Part H Taxation of certain entities
Other entities

HR 5Airport operators: general

  1. This section and sections HR 6 and HR 7 apply to determine for this Act certain aspects of the treatment of an airport operator that is a joint venture between the Crown and a local authority.

  2. The airport operator is treated as a company.

  3. Each joint venturer is treated as holding shares in the company in proportion to their share of the profits of the joint venture, as determined under the joint venture agreement (after allowing for adjustments for earlier income years).

  4. The airport operator is treated as a person separate from—

  5. the Crown; and
    1. each airport authority; and
      1. each other person.

        1. The airport operator is treated as neither a public authority nor a local authority.

        2. The airport operator is not treated as a mutual association for the purposes of subpart HE (Mutual associations).

        3. Subsection (8) applies to the extent to which—

        4. a joint venturer provides funds for the airport operator’s activities; and
          1. the joint venturers expressly agree that the funds are to be provided for the airport operator’s activities; and
            1. the funds are provided for consideration in the nature of interest payable by the airport operator.

              1. The funds are treated as money borrowed by the airport operator and the consideration is treated as interest.

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