This note is not part of the regulations, but is intended to indicate their general effect.
These regulations, which come into force on 1 July 2011, prescribe the capital charge rules for the purposes of section 166 of the Crown Entities Act 2004 (the Act).
Regulation 3 defines key terms that are used in these regulations. A word or expression used, but not defined, in these regulations but defined in the Act has the same meaning as it has in the Act (see section 34 of the Interpretation Act 1999).
Regulation 4 provides that these regulations apply to a statutory entity that has been notified, in accordance with section 166(1) of the Act, that it is subject to a capital charge under that section. Section 166(1) provides that the Minister of Finance (the Minister) may notify a statutory entity in writing that it is subject to a capital charge. If such notification has not been given to an entity, section 166 does not apply to that entity.
Regulations 5 to 8 set out the capital charge rules. In summary, the rules are as follows:
a statutory entity to which these regulations apply must pay the charge twice yearly. The charge is based on an entity's liable net assets as at 31 December and 30 June of each year (regulation 5):
the capital charge must be calculated by multiplying the liable net assets of the entity at the relevant date (that is, as at either 31 December or 30 June) by the public sector discount rate applying on that date (liable net assets and public sector discount rate are defined in regulation 3), and then dividing that sum by 2 (regulation 6):
the Minister may require a statutory entity to provide him or her with evidence relating to assets acquired by that entity by way of gift (unless otherwise compensated by the Crown, the Minister may not require an entity to pay a capital charge in respect of the net value of such assets: see section 166(3) of the Act). A statutory entity must provide the evidence as soon as is reasonably practicable after receiving a request from the Minister. This evidence is to enable the Minister to verify that the assets were, in fact, acquired by way of gift, the net value of those assets, and that the entity has not been otherwise compensated by the Crown in relation to the gift (regulation 7):
a statutory entity must be invoiced for the statutory charge in June and December of each year. Each invoice must specify the entity's liable net assets at the relevant date, the public sector discount rate applying at that date, the capital charge payable, and the date by which the charge is payable. Section 166(2) of the Act requires a statutory entity to pay the capital charge to the Crown, and regulation 8(3) specifies the time in which the charge must be paid (that is, by the date specified in the invoice) (regulation 8).