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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 income from shipping to other countries is divided for tax purposes"

Illustration for Income Tax Act 2007

When you transport people or property by sea from New Zealand to another country, some of the income you earn is treated as coming from New Zealand. You treat 5% of the income as coming from New Zealand and the rest as not coming from New Zealand. The Commissioner can change this if the country where you live would treat income from New Zealand in a similar way. You are not allowed to claim a deduction for expenses under section DW 3 for this type of income. If you transport people or property from a New Zealand port to another country, it is still considered transport to another country even if the ship stops at another New Zealand port first. This rule applies even if the ship calls at another New Zealand port before leaving New Zealand.

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

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Part YDefinitions and related matters
Residence and source in New Zealand

YD 6Apportionment of income from sea transport

  1. 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.

  2. 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.

  3. 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—

  4. not having a source in that country:
    1. otherwise as exempt from, or not liable to, income tax in that country.

      1. The non-resident is denied a deduction under section DW 3 (Non-resident general insurers and shippers) for expenditure or loss incurred.

      2. 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
      Notes
      • Section YD 6(3)(b): amended, on (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 , by section 159 of the Taxation (Annual Rates, Returns Filing, and Remedial Matters) Act 2012 (2012 No 88).