Income tax for local authorities

Special income tax rules apply to local authorities.

Taxable income

A local authority must pay income tax on non-dividend income (for example, rent and management fees) received from a:

• council-controlled organisation (CCO)
• port company
• energy company.

Exempt income

For local authorities, this income is exempt:

• rates received from ratepayers
• income from core services (like parking fees)
• dividends received from a CCO, port company or energy company.

Limitations on income tax deductions 

Gifts

Local authorities cannot claim a deduction for charitable or other public-benefit gifts made to donee organisations.

Imputation

Local authorities cannot convert unused imputation credits to a tax loss.