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Income Tax Act 2007

Income - Exempt income

CW 38B: Public purpose Crown-controlled companies

You could also call this:

“Tax exemptions for companies working on important public projects”

When you have a public purpose Crown-controlled company, some of its income is exempt from tax. This means the company doesn’t have to pay tax on that money.

If the company has sinking funds to pay off its debts, any income from these funds is tax-free. Also, any other income the company makes is usually tax-free too.

However, there’s an exception. If the company is acting as a trustee, that income isn’t tax-free. But if the company gives that money to someone else as a beneficiary, and that person’s share is tax-free, then it’s okay.

The Governor-General can change the list of these companies. They can add new companies if they meet certain rules, like being mostly owned by the government and working on important public projects. They can also change a company’s name on the list or remove a company from it.

The Minister of Revenue must ask for a company to be removed from the list if it’s no longer a registered company or doesn’t meet the rules anymore.

When the Governor-General makes these changes, it’s called an Order in Council. This is a type of law that has to be published for everyone to see.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=LMS179105.

Topics:
Money and consumer rights > Taxes
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Part C Income
Exempt income

CW 38BPublic purpose Crown-controlled companies

  1. An amount of income derived from sinking funds relating to the debt of a public purpose Crown-controlled company is exempt income.

  2. Any other amount of income derived by a public purpose Crown-controlled company is exempt income.

  3. Subsection (2) does not apply to an amount of income that a public purpose Crown-controlled company derives as a trustee, other than an amount distributed as beneficiary income to a beneficiary who derives the amount as exempt income.

  4. The Governor-General may, by Order in Council made on the recommendation of the Minister of Revenue, amend schedule 35—

  5. to add the name of a company that meets the following criteria:
    1. the company is listed in schedule 4A of the Public Finance Act 1989 or 100% of the voting interests in the company are held by the group of persons that holds 100% of the voting interests in a company listed in schedule 4A of that Act; and
      1. Ministers of the Crown hold, on behalf of the Crown, more than 50% of the voting interests in the company; and
        1. all other voting interests, if any, in the company are held by local authorities; and
          1. the company’s primary purpose is the carrying out of a public policy objective of the Government of New Zealand:
          2. to substitute the name of a company in recognition of a change in its name:
            1. to remove the name of a company.

              1. The Minister of Revenue must recommend that an Order in Council be made to remove the name of a company from schedule 35 if the Minister is satisfied that—

              2. the company has been removed from the register of companies kept under the Companies Act 1993; or
                1. the company no longer meets the criteria set out in subsection (4)(a).

                  1. An Order in Council under subsection (4) is secondary legislation (see Part 3 of the Legislation Act 2019 for publication requirements).

                  Notes
                  • Section CW 38B: inserted, on , by section 139 of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).
                  • Section CW 38B(1) heading: replaced (with effect on 18 March 2019), on , by section 98(1) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                  • Section CW 38B(2) heading: replaced (with effect on 18 March 2019), on , by section 98(2) of the Taxation (KiwiSaver, Student Loans, and Remedial Matters) Act 2020 (2020 No 5).
                  • Section CW 38B(6) heading: inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).
                  • Section CW 38B(6): inserted, on , by section 3 of the Secondary Legislation Act 2021 (2021 No 7).