How the Charities Act affects charitable trusts, incorporated societies and companies
Updated June 2009
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Charitable trusts, incorporated societies and companies need to register under the Charities Act to retain tax benefits on the grounds of charitable purpose.
Introduction
The Charities Act 2005 relates to charitable organisations. It does not replace the Charitable Trusts Act 1957, or the Incorporated Societies Act 1908 or provisions of the Companies Act 1993. They are separate Acts for separate purposes, and they continue to apply.
Being a registered charitable trust, incorporated society or a company is not the same as being registered under the Charities Act.
If your organisation is currently a registered charitable trust or an incorporated society or a company, you will still need to consider registration under the Charities Act to retain certain tax benefits on the grounds of charitable purpose.
The Charities Act set up the Charities Commission. Part of the Commission’s role is to establish and maintain a registration and monitoring system for charitable organisations in New Zealand.
The Charities Register opened on 1 February 2007, and is accessible to the public.
Why should we register under the Charities Act?
Registration under the Charities Act is voluntary. However, if an organisation is already a registered charitable trust, incorporated society or a company, it will still need to register with the Commission if it wishes to have exemptions from income tax and estate and gift duty and become a ‘registered charitable entity’.
Charitable organisations had until 1 July 2008 to register with the Commission before the tax laws changed.
Why do we have to register twice?
The Charitable Trusts Act, the Incorporated Societies Act and the Companies Act set up organisations as legal entities. The Charities Act has no impact on an organisation’s legal entity status, so organisations registered with the Charities Commission will still need to comply with these other Acts if they wish to keep their legal status. The Charities Act does require the Commission’s close inspection of an organisation’s charitable purpose, as well as the certification of its officers.
Organisations registered under the Charities Act have their details made publicly available to help promote public confidence in the charitable sector. For instance, registered charitable entities must file an Annual Return with the Charities Commission, outlining their activities, income and expenditure and other information. Applications for registration, annual returns and any notices of change will be publicly available on the Charities Register.
However, the Charities Commission may restrict public access to certain information and documents if it considers it is in the public interest to do so. You can ask for information to be restricted from public access if you believe it is not appropriate for it to appear on the public Register.
Will we still need to comply with all the requirements of the Charitable Trusts Act, Incorporated Societies Act and the Companies Act?
Yes, if your organisation is registered under those Acts. The Charities Commission will not take over the running of the charitable trusts register, the incorporated societies register or the companies register. This is because not all charitable trusts, incorporated societies or companies will choose to register under the Charities Act.
Incorporated Societies that register with the Charities Commission:
- only need to send an Annual Return to the Commission. You will no longer be required to send financial statements to the Companies Office.
- must otherwise comply with all reporting requirements of both Acts.
Are we eligible for registration under the Charities Act?
Yes, if your organisation has a genuine charitable purpose that is directed towards the public benefit and your officers are qualified to be officers under the Charities Act. (See our information sheet Officer certification for more details.) The Commission will use the well-established common law test for charitable purposes, which requires the rules of an organisation to clearly state that its purposes are for one or more of the following:
- the relief of poverty
- the advancement of education
- the advancement of religion
- any other matters that are beneficial to the community.
What do we do if we want to change our rules, trust deed or constitution?
If you are a registered charitable trust, an incorporated society, or a company, you must continue to send changes to your rules to the Companies Office for their approval. Once they have been approved, you must then notify the Charities Commission of the change within three months of the date of the change. It is important to check first that any changes you make will meet both the Companies Office and the Charities Commission’s criteria.
Further information
For more details, please also read our information sheets:
• Timing it right
• Charitable purpose
• Your rules and the Charities Act
• Officer certification
• What to do when something about your charity changes
For more information about the Charities Commission or registration under the Charities Act, please browse our website.
You can also call the Charities Commission on our free information line – 0508 242 748.
To get updates by email, please send your name, the name of your organisation and your contact details to info@charities.govt.nz.