Special income tax rules apply to local authorities.
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.
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
Local authorities cannot claim a deduction for charitable or other public-benefit gifts made to donee organisations.
Local authorities cannot convert unused imputation credits to a tax loss.