Income Tax Act 2007

If you need more information about this Act, please contact the administering agency: Inland Revenue Department
HR 12 Non-exempt charities: treatment of tax-exempt accumulations
Who this section applies to

(1)

This section applies to—

(a)

a person who—

(i)

is registered on the register of charitable entities under the Charities Act 2005 for a period; and

(ii)

derives exempt income under section CW 41 or CW 42 (which relate to charities) in the same period; and

(iii)

is deregistered as a charitable entity on the end date:

(b)
[Repealed]

When this section does not apply

(2)

This section does not apply if—

(a)

the person is re-registered on the register of charitable entities within 1 year of the end date:

(b)

the person’s end date arises because they are a company and shares in them are disposed of, and the disposal is for market value consideration:

(c)

the person would, but for this paragraph, have $10,000 or less income under this section on their end date.

Treatment of income

(3)

The person has an amount of income derived on the day that is 1 year after the end date that is equal to the current market value, on the end date, of assets that the person has on the end date less the current market value, on the end date, of liabilities that the person has on the end date, but ignoring:

(a)

assets that are disposed of or transferred within 1 year of the end date, together with any rights and obligations, to another person—

(i)

for charitable purposes:

(ii)

in accordance with the person’s rules set out in the register of charitable entities immediately before the person’s removal from the register:

(b)

assets received from the Crown—

(i)

to settle a Treaty of Waitangi claim:

(ii)

in accordance with the Maori Fisheries Act 2004:

(c)

assets that are not money and are gifted or bequeathed to the person when they met the requirements to derive exempt income under section CW 41 or CW 42:

(d)

assets that are land set apart in a Maori reservation for the purposes of a marae or meeting place under Part 17 of the Te Ture Whenua Maori Act 1993:

(e)

assets that are shares in companies, if this section applies to the companies and their end dates are the same as the person’s end date.

Person’s rules[Repealed]

(4)

[Repealed]

Negative amounts

(5)

For the purposes of the calculation in subsection (3), if the amount is negative, it is treated as zero.

References to assets and liabilities

(6)

In this section, references to assets and liabilities, as applicable,—

(a)

mean the assets and liabilities owned, controlled, or held, wholly or in part, immediately before the end date; and

(b)

include—

(i)

all assets of any kind; and

(ii)

all liabilities, including debts, charges, duties, contracts, or other obligations, whether present, future, actual, contingent, payable, or to be observed or performed in New Zealand or elsewhere.

Definitions

(7)

In this section,—

end date means, for a person, the day of final decision

current market value means—

(a)

for an asset or liability for which section HR 11 gives a value for the purposes of this Act, that value:

(b)

for an asset or liability for which section HR 11 does not give a value for the purposes of this Act,—

(i)

the market value of the asset or liability; but

(ii)

if the person uses the Public Benefit Entity International Not-for-Profit Accounting Standard 17 (the standard), the fair value of the asset or liability under the standard.

Defined in this Act: amount, asset, charitable purpose, current market value, day of final decision, end date, exempt income, income, liabilities, New Zealand, real property, share, year

Section HR 12: replaced, on 29 March 2018 (with effect on 6 April 2016), by section 137 of the Taxation (Annual Rates for 2017–18, Employment and Investment Income, and Remedial Matters) Act 2018 (2018 No 5).

Section HR 12(1)(a): amended, on 1 April 2019, by section 226(1) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(1)(b): repealed, on 1 April 2019, by section 226(2) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(2) heading: replaced, on 1 April 2019, by section 226(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(2): replaced, on 1 April 2019, by section 226(3) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(3): amended, on 1 April 2019, by section 226(4) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(3)(a)(ii): replaced, on 1 April 2019, by section 226(5) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(3)(c): amended, on 1 April 2019, by section 226(6) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(3)(d): inserted (with effect on 14 April 2014), on 18 March 2019, by section 226(7) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(3)(e): inserted, on 1 April 2019, by section 226(8) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(4) heading: repealed, on 1 April 2019, pursuant to section 226(9) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(4): repealed, on 1 April 2019, by section 226(9) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(7) heading: replaced, on 1 April 2019, by section 226(10) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12(7): replaced, on 1 April 2019, by section 226(10) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).

Section HR 12 list of defined terms current market value: inserted, on 1 April 2019, by section 226(11) of the Taxation (Annual Rates for 2018–19, Modernising Tax Administration, and Remedial Matters) Act 2019 (2019 No 5).