Income Tax Act 2007

Definitions and related matters - Residence and source in New Zealand

YD 6: Apportionment of income from sea transport

You could also call this:

"How to divide income from transporting people or goods by sea between New Zealand and other countries"

When you transport people or property by sea from New Zealand to another country, some of the income you earn is considered to come from New Zealand. You treat five percent of the income as coming from New Zealand and the rest as not coming from New Zealand. The Commissioner can change this if another country would treat income from New Zealand in a similar way.

If you are not a New Zealand resident, you cannot claim a deduction for expenses under section DW 3 for things like expenditure or loss. You are considered to be taking people or property to another country even if your ship stops at another New Zealand port first. This rule applies even if you do not leave New Zealand right away.

You need to follow these rules when working out your income from sea transport. The Commissioner has some flexibility to adjust the rules if another country has similar rules. This helps make sure the rules are fair for everyone.

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This page was last updated on 20 May 2025

View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1523147.

YD 5B: Attribution of income and expenditure to permanent establishment in New Zealand, or

"How to calculate income and expenses for your New Zealand-based permanent business location"

YD 7: Apportionment of film rental income, or

"Old rule about dividing film rental income no longer applies"

Part YDefinitions and related matters
Residence and source in New Zealand

YD 6Apportionment of income from sea transport

This section applies when a non-resident derives an amount of income from transporting people or property by sea from New Zealand to a destination outside New Zealand.
Five percent of the amount is treated as having a source in New Zealand and the remainder of the amount is treated as not having a source in New Zealand.
Despite subsection (2), the Commissioner may reduce the amount that is treated as having a source in New Zealand to the extent to which the country in which the non-resident is resident would treat an amount derived by a New Zealand resident from sea transport from that country as—
not having a source in that country:
otherwise as exempt from, or not liable to, income tax in that country.

The non-resident is denied a deduction under section DW 3 (Non-resident general insurers and shippers) for expenditure or loss incurred.
The transport of people or property from a port in New Zealand is treated as transport to a place outside New Zealand even if the ship calls at another New Zealand port before leaving New Zealand.

Compare

2004 No 35 ss FC 18, FC 19

Notes

Section YD 6(3)(b): amended, on 29 March 2018 (with effect on 1 April 2008 and applying for the 2008–09 and later income years), by section 249(1) of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).
Section YD 6(4): amended, on 2 November 2012, by section 159 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).