HR 12 Non-exempt charities: taxation of tax-exempt accumulation
When this section applies

(1)

This section applies on and after the day of final decision (the end date).

When this section does not apply

(2)

This section does not apply if the person—

(a)

meets, on the day before the end date, the requirements to derive exempt income under a provision in subpart CW excluding section CW 41 or CW 42 (which relate to charities):

(b)

is re-registered on the register of charitable entities (the register) under the Charities Act 2005 within 1 year of the end date.

Taxation of tax-exempt accumulation

(3)

The person has an amount of income, derived on the day that is a year after the end date, equal to the greater of zero or the value of net assets that the person held on the end date, but ignoring—

(a)

assets distributed or applied in the year after the end date, for charitable purposes; and

(b)

assets distributed or applied in the year after the end date, in accordance with the person’s rules contained on the register; and

(c)

assets received from the Crown—

(i)

to settle a Treaty of Waitangi claim:

(ii)

in accordance with the Maori Fisheries Act 2004; and

(d)

assets, other than money, gifted or left to the person when the person met the requirements to derive exempt income under section CW 41 or CW 42.

Meaning of net assets

(4)

In this section, net assets means the assets of the person held on the end date, less the liabilities of the person on the end date.

Defined in this Act: day of final decision, exempt income, income, net assets

Section HR 12: inserted (with effect on 14 April 2014), on 30 June 2014, by section 129(1) of the Taxation (Annual Rates, Employee Allowances, and Remedial Matters) Act 2014 (2014 No 39); and applying (as amended, with effect on 14 April 2014, on 24 February 2016): (a) on and after 1 April 2015, unless paragraph (b) or (c) applies; (b) on and after 14 April 2014, if the person is removed from the register of charitable entities before 1 April 2015 because section 32(1)(f) of the Charities Act 2005 applies; (c) on and after 1 April 2017, if the person’s activities involve the provision of housing as part of achieving the person’s objectives and purposes and paragraph (b) does not apply.