Crown Entities (Capital Charge Rules) Regulations 2011

2011/135

Coat of Arms of New Zealand

Crown Entities (Capital Charge Rules) Regulations 2011

Anand Satyanand, Governor-General

Order in Council

At Wellington this 16th day of May 2011

Present:
His Excellency the Governor-General in Council

Pursuant to section 173(1)(h) of the Crown Entities Act 2004, His Excellency the Governor-General, acting on the advice and with the consent of the Executive Council, makes the following regulations.

Regulations

1  Title
  • These regulations are the Crown Entities (Capital Charge Rules) Regulations 2011.

2  Commencement
  • These regulations come into force on 1 July 2011.

3  Interpretation
  • In these regulations, unless the context otherwise requires,—

    capital charge means a capital charge imposed on a statutory entity in accordance with section 166 of the Act

    liable net assets

    • (a) means—

      • (i) the net assets of a statutory entity; or

      • (ii) if a capital charge is payable on only part of a statutory entity's net assets, the net assets in respect of which a capital charge is payable; but

    • (b) does not include the net value of assets acquired by a statutory entity by way of gift (as described in section 166(3) of the Act), unless the entity is otherwise compensated by the Crown in respect of that gift

    Minister means the Minister of Finance

    net assets has the meaning given to it by section 166(4) of the Act

    public sector discount rate means the default public sector discount rate (as set by the Treasury) expressed as a percentage.

4  Application
  • 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.

5  Rules applying to payment of capital charge
  • A capital charge is payable twice yearly by a statutory entity to which these regulations apply, in respect of the statutory entity's liable net assets as at 31 December and 30 June of each year.

6  Rules applying to calculation of capital charge
  • The capital charge payable by a statutory entity to which these regulations apply must be calculated by—

    • (a) multiplying the statutory entity's liable net assets as at 31 December or 30 June (as the case may be) of each year by the public sector discount rate that applied on that date; and

    • (b) dividing that sum by 2.

7  Rules applying in relation to assets acquired by statutory entity by way of gift
  • (1) If a charge is not payable in relation to assets acquired by a statutory entity by way of gift (as provided for in section 166(3) of the Act), the entity must, if requested by the Minister, provide the Minister with evidence to verify—

    • (a) that those assets were, in fact, acquired by way of gift; and

    • (b) the net value of those assets; and

    • (c) that the statutory entity has not been otherwise compensated by the Crown in relation to that gift.

    (2) A statutory entity must provide the evidence specified in subclause (1) to the Minister as soon as is reasonably practicable after receiving the request.

8  Rules applying to invoicing for capital charge
  • (1) An invoice must be sent to each statutory entity to which these regulations apply, notifying the entity of the capital charge payable,—

    • (a) in June of each year (for the payment relating to the statutory entity's liable net assets as at 31 December of the previous year); and

    • (b) in December of each year (for the payment relating to the statutory entity's liable net assets as at 30 June of that year).

    (2) The invoice must specify—

    • (a) the statutory entity's liable net assets as at 31 December or 30 June, as the case may be; and

    • (b) the public sector discount rate that applied on that date; and

    • (c) the capital charge payable by the statutory entity; and

    • (d) the date by which the charge is payable.

    (3) A statutory entity must pay the capital charge no later than the date specified in the invoice.

Rebecca Kitteridge,
Clerk of the Executive Council.


Explanatory note

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).


Issued under the authority of the Acts and Regulations Publication Act 1989.

Date of notification in Gazette: 19 May 2011.

These regulations are administered by the Treasury.