Income Tax Act 2007

Source

YD 4 Classes of income treated as having New Zealand source
What this section does

(1)

This section lists the types of income that are treated as having a source in New Zealand for the purposes of this Act.

Business in New Zealand

(2)

Income derived from a business has a source in New Zealand if—

(a)

the business is wholly carried on in New Zealand:

(b)

the business is partly carried on in New Zealand, to the extent to which the income is apportioned to a New Zealand source under section YD 5.

Contracts made or performed in New Zealand

(3)

Income derived by a person from a contract has a source in New Zealand if the contract is—

(a)

made in New Zealand, except to the extent to which the person wholly or partly performs the contract outside New Zealand, and the income is apportioned to a source outside New Zealand under section YD 5:

(b)

made outside New Zealand but the person wholly or partly performs the contract here, to the extent to which the income is apportioned to a New Zealand source under section YD 5.

Personal services in New Zealand

(4)

An amount that is income under section CE 1 (Amounts derived in connection with employment) has a source in New Zealand if the amount is earned in New Zealand, even if the employer is not a New Zealand resident.

Accident compensation payments

(5)

An accident compensation payment as defined in section CF 1(2) (Benefits, pensions, compensation, and government grants) has a source in New Zealand.

Pensions

(6)

The following amounts have a source in New Zealand:

(a)

a pension or annuity payable by the government of New Zealand:

(b)

a pension or annuity payable out of a superannuation scheme established in New Zealand:

(c)

a gratuitous payment, within the definition of pension in section CF 1(2), if the services are provided in New Zealand.

Income from land owned in New Zealand

(7)

Income derived by a person as the owner of land in New Zealand has a source in New Zealand.

Income from use in New Zealand of personal property

(8)

Income, other than a royalty, derived as consideration for the use of, or right to use, personal property in New Zealand has a source in New Zealand if the income is—

(a)

paid by a New Zealand resident:

(b)

paid by a non-resident, and for which the non-resident is allowed a deduction.

Royalties

(9)

A royalty has a source in New Zealand if it is—

(a)

paid by a New Zealand resident and not made in connection with a business they carry on outside New Zealand through a fixed establishment outside New Zealand:

(b)

paid by a non-resident, and for which the non-resident is allowed a deduction.

Dividends

(10)

Income derived from shares in, or membership of, a company resident in New Zealand has a source in New Zealand.

Income from debt instruments

(11)

The following amounts have a source in New Zealand—

(a)

interest or a redemption payment derived from money lent in New Zealand:

(b)

interest or a redemption payment derived from money lent outside New Zealand—

(i)

to a New Zealand resident, except to the extent to which the money is used by them for the purposes of a business they carry on outside New Zealand through a fixed establishment outside New Zealand and the interest or redemption payment is not apportioned to a New Zealand source under section YD 5(4):

(ii)

to a non-resident, if the money is used by them for the purposes of a business they carry on in New Zealand through a fixed establishment in New Zealand:

(c)

income from securities issued by the government of New Zealand:

(d)

income derived from debentures issued by a local authority or public authority:

(e)

income derived from a mortgage of land in New Zealand.

Income from disposal of New Zealand property

(12)

Income derived from the disposal of property situated in New Zealand has a source in New Zealand.

Beneficiary income

(13)

Income derived by a beneficiary from a trust has a source in New Zealand to the extent to which the income of the trust fund has a source in New Zealand.

Income from air transport

(14)

Income derived from transporting people or property by air has a source in New Zealand if the transportation leaves from New Zealand.

Income from sea transport

(15)

Income derived from transporting people or property by sea has a source in New Zealand if the transportation leaves from New Zealand to the extent to which the income is apportioned to a New Zealand source under section YD 6.

Non-resident general insurers

(16)

A premium for general insurance paid to a non-resident general insurer of the type described in section YD 8 has a source in New Zealand to the extent set out in section YD 8(2).

Non-resident life insurers: policies in New Zealand

(17)

Income of a non-resident life insurer calculated under section EY 48 (Non-resident life insurers with life insurance policies in New Zealand) has a source in New Zealand.

Income from New Zealand partnerships

(17B)

Income has a source in New Zealand if, treating all of the partners of a New Zealand partnership as resident in New Zealand, the income is treated as having a source in New Zealand under another provision of this section. The application of the other provisions of this section is unaffected if this subsection does not apply.

Income through permanent establishment

(17C)

Income attributable to a permanent establishment in New Zealand of a non-resident has a source in New Zealand, except if—

(a)

subsections (15) to (17) provide otherwise:

(b)

the income is a dividend from a share in a foreign company that is not revenue account property.

Income taxable under double tax agreement

(17D)

Income of a non-resident that may be taxed in New Zealand under a double tax agreement and does not have a source under subsections (15) to (17) has a source in New Zealand, except if the income is a dividend from a share in a foreign company that is not revenue account property.

Any other source in New Zealand

(18)

Income derived directly or indirectly from any other source in New Zealand has a source in New Zealand.

Defined in this Act: accident compensation payment, amount, business, company, debenture, deduction, dispose, dividend, double tax agreement, employer, fixed establishment, foreign company, general insurance, income, interest, life insurer, local authority, money lent, New Zealand, New Zealand partnership, New Zealand resident, non-resident, partner, pay, pension, permanent establishment, public authority, redemption payment, revenue account property, royalty, share, source in New Zealand, superannuation scheme

Compare: 2004 No 35 s FB 2(2)

Section YD 4(11)(b)(i): replaced, on 30 March 2017, by section 294 (and see section 5) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).

Section YD 4(17B) heading: inserted, on 1 April 2008, by section 26(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).

Section YD 4(17B): inserted, on 1 April 2008, by section 26(1) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).

Section YD 4(17C) heading: inserted, on 1 July 2018, by section 50(1) (and see section 50(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

Section YD 4(17C): inserted, on 1 July 2018, by section 50(1) (and see section 50(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

Section YD 4(17D) heading: inserted, on 1 July 2018, by section 50(1) (and see section 50(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

Section YD 4(17D): inserted, on 1 July 2018, by section 50(1) (and see section 50(3) for application) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

Section YD 4(17D): amended (with effect on 1 July 2018), on 18 March 2019, by section 285(1) (and see section 285(2) for application) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

List of defined terms dividend: inserted, on 1 July 2018, by section 50(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

List of defined terms double tax agreement: inserted, on 1 July 2018, by section 50(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

List of defined terms foreign company: inserted, on 1 July 2018, by section 50(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

Section YD 4 list of defined terms New Zealand partnership: inserted, on 1 April 2008, by section 26(2) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).

Section YD 4 list of defined terms partner: inserted, on 1 April 2008, by section 26(2) of the Taxation (Limited Partnerships) Act 2008 (2008 No 2).

List of defined terms permanent establishment: inserted, on 1 July 2018, by section 50(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

List of defined terms revenue account property: inserted, on 1 July 2018, by section 50(2) of the Taxation (Neutralising Base Erosion and Profit Shifting) Act 2018 (2018 No 16).

Section YD 4 compare note: amended, on 29 March 2018 (with effect on 1 April 2008), by section 248 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).