23GExemption of interest received by credit unions

23G  Exemption of interest received by credit unions credit union means a company in relation to which the following conditions are satisfied:  (a) the company is an ADI (authorised deposit‑taking institution) for the purposes of the Banking Act 1959;  (b) the company has a consent under section 66 of that Act that allows it to assume or use the expression “credit union” or “credit society”, or another expression (whether or not in English) that is of like import to either of those expressions.  (2) Income derived during a year of income by a credit union that is an approved credit union in relation to that year of income, being interest paid to the credit union by members of the credit union not being companies in respect of loans made to those members, is exempt from income tax.  (2A) Subsection (2) does not apply to a credit union in relation to a year of income if:  (a) the credit union is a recognised medium credit union in relation to the year of income; or  (b) the credit union is a recognised large credit union in relation to the year of income.  (3) For the purposes of this section, a credit union is an approved credit union in relation to a year of income if, and only if, the Commissioner is satisfied that:  (a) during that year of income the credit union did not enter into any transactions of a kind not ordinarily entered into by a company of a kind referred to in paragraph (a) of the definition of credit union in subsection (1); and  (b) by comparison with the profits of other credit unions for that year of income and the amounts transferred by those credit unions out of those profits to reserves, and after making due allowance for differences in the numbers of transactions entered into by other credit unions and the first‑mentioned credit union and the amounts to which the respective transactions related, the profit of the first‑mentioned credit union for that year of income was not excessive and the first‑mentioned credit union did not transfer an unreasonable part of that profit to a reserve.  (4) In determining for the purposes of paragraph (3)(a) whether any transactions entered into by a credit union during a year of income were transactions of a kind referred to in that paragraph, the Commissioner may have regard to:  (a) the circumstances in which, and the terms and conditions upon which, during that year of income:  (i) moneys were lent to, invested with, or otherwise obtained by, the credit union;  (ii) moneys were lent or otherwise made available by the credit union to its members or to other persons; and  (iii) moneys were invested by the credit union;  (b) the nature of the connexion (if any) between:  (i) the credit union or any of its members and any of the persons by whom moneys were lent to, invested with, or otherwise made available to, the credit union during that year of income;  (ii) the credit union or any of its members and any of the persons who owed moneys to the credit union at any time during that year of income; or  (iii) any of the persons by whom moneys were lent to, invested with, or otherwise made available to, the credit union during that year of income and any of the persons who owed moneys to the credit union at any time during that year of income; and  (c) any other relevant matters.