Schools and the Charities Act
Download the information sheet (PDF, 457KB) to print this document.
The Ministry of Education has worked with the Charities Commission, Inland Revenue and the New Zealand Parent Teacher Association to ensure that this information for schools, also published in the 17 April 2008 Education Gazette, is consistent across these organisations.
This information sheet sets out information that has been prepared by the Ministry of Education to provide answers to questions about Charities Act registration and tax issues relating to schools, school trusts and Parent Teacher Associations and the Charities Act 2005.
State and State Integrated School Boards of Trustees
State and state integrated schools do not have to register with the Charities Commission to retain their existing exemption from income tax for school operations.
Income tax
State and state integrated schools are exempt from income tax under the Education Act (Schedule 6, clause 2). State and state integrated schools do not need to register with the Charities Commission to remain exempt from income tax for school operations.
Donee status
This is dealt with by Inland Revenue, not the Charities Commission but is included here for completeness. Donations to state and state integrated schools are currently eligible under existing Inland Revenue policy for an income tax rebate for the donor, and Inland Revenue does not plan to change its policy on this. State and state integrated schools do not need to register with the Charities Commission to retain donee status.
Gift duty
Gifts to state and state integrated schools currently rely on charitable status for any exemption from gift duty for the giver.
| From 1 July 2008, state and state integrated schools will need to be registered with the Charities Commission to ensure that the people who make gifts to these schools (that would otherwise be liable for gift duty) are eligible for an exemption based on charitable purpose after 1 July 2008. |
Note that gift duty is only payable by a person who has made gifts that total more than $27,000 within a year.
The Education Ministry is consulting with government ministers about how gifts to schools could retain exemption from gift duty without schools registering with the Charities Commission. Further advice will be issued by the Ministry of Education as soon as possible on this.
A state or state integrated school may choose to register with the Charities Commission for other reasons that are not tax-related. Some organisations are only permitted to make donations to charitable organisations and may require applicants to be registered with the Charities Commission.
Trusts associated with schools
Trustees of trusts associated with schools will need to register with the Charities Commission before 1 July 2008 to be eligible for tax exemptions based on having a charitable purpose after 1 July 2008. Refer to this website for more information about registration.
Parent Teacher Associations (PTAs)
The Ministry provides the following information for PTAs to help them reach a decision on whether to register with the Charities Commission, not to recommend what they should do. There are three options listed below.
Registration with the Charities Commission
If PTAs wish to be eligible for income tax exemption and gift duty exemption on the grounds of charitable purpose after 1 July 2008, they will need to register with the Charities Commission before 30 June 2008. Refer to this website for more information about registration.
Key points to note about registration with the Charities Commission include:
- There is no cost to register with the Charities Commission.
- Your PTA needs to have written rules. The Charities Commission has information on its website to help develop these rules and the national PTA body has a template constitution available to members – refer to www.nzpta.org.nz
- Once registered, your PTA will need to file an annual return with the Charities Commission. However, if you are registered with the Charities Commission and your PTA is also registered as an incorporated society it will no longer need to file annual returns with the Registrar of Incorporated Societies.
- If your PTA income is over $10,000 per year there will be a fee of $50 per year for filing the annual return electronically ($75 if it is filed on paper). Your accounts do not have to be audited (but the national PTA body recommends an independent review).
Non-profit status
If a PTA does not register with the Charities Commission,and it is a not-for-profit body, it will still have not-for-profit status which gives it an exemption from income tax on the first $1,000 of net income.
A non-profit organisation is any society, association or organisation, incorporated or unincorporated that:
- is not carried on for the profit or gain of any member, and
- has rules that do not allow money, property or any other benefits to be distributed to any of its members.
Non-profit organisations that are registered and incorporated under the Incorporated Societies Act 1908 are taxed at the rate of 33 cents in the dollar. Unincorporated non-profit organisations (and PTAs are likely to fall within this group) are taxed at the same rate as individuals.
PTAs can find the income tax rates for all years since 1998 by using the Income tax rate calculator on Inland Revenue’s website. The calculator can also work out tax on taxable income.
To apply for non-profit organisation status a PTA should provide the following information to Inland Revenue:
- IRD number - if a PTA does not have an IRD number it will need to apply for one.
- A copy of its rules, constitution, trust deed or other founding documents - preferably in draft form (before being finalised).
- A copy of its certificate of incorporation (if applicable).
Board of trustees sub-committee
Alternatively, a PTA of a state or state integrated school could discuss with its school board the possibility of relinquishing its fundraising activities to the board of trustees. This would mean that fundraising activities would have the same income tax exemptions that state and state integrated schools have.
The PTA would in this case be replaced in its fundraising activities by a committee of the board of trustees.
As part of the board of trustees, the fundraising committee would use a school bank account and be included in the board of trustees’ GST returns and annual financial statements.
Section 66 of the Education Act 1989 allows a school board to delegate any of its functions or powers by resolution and written notice in its minutes. Note that this means that the fundraising committee must have a board member on it, unless special approval is granted by the Minister of Education.
Further information
This information sheet was published in April 2008, based on information from the 17 April 2008 Education Gazette.
For more information about the Charities Commission or registration under the Charities Act, please browse this 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, organisation and contact details to info@charities.govt.nz.