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CW 10: Dividend within New Zealand wholly-owned group
or “Tax-free dividends between fully-owned New Zealand companies”
You could also call this:

“Tax-free dividends for council-controlled companies under specific conditions”

When you receive a dividend from another organisation, it might be exempt from income tax. This happens if you are a council-controlled organisation and meet certain conditions.

For your dividend to be exempt, the organisation paying you must be either a council-controlled organisation or a special type of company like a port or energy company. These special companies would be council-controlled organisations if not for a specific rule in the Local Government Act 2002.

Also, when you get the dividend, all the voting interests in the organisation paying you must be owned by either two or more local authorities, or a mix of government ministers and local authorities.

Finally, for your dividend to be exempt, a local authority must own all the voting interests in your organisation when you receive the dividend.

If all these conditions are met, then the dividend you receive is considered exempt income, which means you don’t have to pay tax on it.

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Next up: CW 11: Dividend of conduit tax relief holding company

or “Removed rule about dividends from a special type of company”
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Part C Income
Exempt income

CW 10BDividends derived by council-controlled organisation holding companies

  1. A dividend derived by a council-controlled organisation (the recipient) from another person (the payer) is exempt income of the recipient if—

  2. the payer is—
    1. a council-controlled organisation; or
      1. a port company, a subsidiary of a port company, or an energy company that would be a council-controlled organisation in the absence of section 6(4) of the Local Government Act 2002; and
      2. at the time the dividend is derived, 100% of the voting interests in the payer are held by—
        1. 2 or more local authorities; or
          1. a combination of 1 or more Ministers of the Crown, on behalf of the Crown, and 1 or more local authorities; and
          2. at the time the dividend is derived, a local authority holds 100% of the voting interests in the recipient.

            Notes
            • Section CW 10B: inserted, on , by section 56(1) (and see section 56(2) for application) of the Taxation (Annual Rates for 2021–22, GST, and Remedial Matters) Act 2022 (2022 No 10).