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Registered Charities

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Guide to the Charities Act

Updated February 2012

You can see a copy of the Charities Act 2005 at www.legislation.govt.nz or buy a copy from any Bennetts bookshop.

On this page:

Introduction to the Charities Act

The Charities Act 2005 (“the Act”) was passed in April 2005. The Act established the Charities Commission (“the Commission”) which came into being on 1 July 2005.

The Commission’s main functions are to:

establish and maintain a registration and monitoring system for charitable organisations
provide support and education to the charitable sector on good governance and management.

Registration under the Act began on 1 February 2007 when the Charities Register (“the Register”) opened.

The Commission helps organisations that want to register by providing plain language information about the Act and how to apply to register under the Act.

Governance

A board appointed by the Minister for the Community and Voluntary Sector governs the Commission.

A Chief Executive and other staff members are responsible for the day-to-day work of the Commission.

Autonomous Crown Entity

The Commission is an Autonomous Crown Entity (ACE). An ACE is an organisation that is independent of Government but it must “have regard” for government policy when directed by the responsible Minister.

The functions of the Commission

The Act says the key functions of the Commission include:

deciding whether to accept an application for registration
monitoring annual returns submitted by registered charities
reporting and making recommendations to Government about charitable sector matters
promoting public trust and confidence in the charitable sector
encouraging the effective use of charitable resources
educating charities about matters of good governance and management
stimulating and promoting research about the charitable sector.

Promotion of public trust and confidence

One function of the Commission is to promote public trust and confidence in the charitable sector.

The Commission does this by encouraging good governance and management practices, by providing educational material and other help. This enables charities to be more effective. Registering and monitoring charities is another way to let the public know that the charities are doing what they say they are doing.

Education and support

The Commission’s advice and help is available to all charities, registered or not. The Commission is also able to offer advice to Government about the charitable sector and may promote sector research.

Registration

The Charities Register opened on 1 February 2007.

Registration as a charity is voluntary and there is no registration fee. Applications can be made online or on paper forms.

Why register?

Registered charities gain several benefits:

1. Getting or keeping tax exemptions

Changes to the Income Tax Act 2004 mean that only charities registered with the Commission are eligible for tax exemptions.

Tax exempt status means registered charities don’t have to pay income tax (including resident withholding tax. The changes took effect on 1 July 2008. These changes don’t affect donee status.

2. Being listed on the Charities Register

The public can search the Register online to find out about a registered charity.

3. Getting a registration number

The Commission gives registered charities a unique registration number, which they can display on promotional material. It lets the public know that the charity has met the requirements for registration under the Act.

4. Information on the charitable sector

By registering, charities provide the Commission with information about the charitable sector in New Zealand. This will help the Commission fulfill its education and support function to the sector and the public.

5. Attending the Commission’s annual meetings

The Commission holds annual meetings for its registered charities. The meetings give charities an opportunity to have a say in the work of the Commission.

Charitable trusts and incorporated societies may need to register

Even if an organisation is already a charitable trust or an incorporated society, it still needs to register with the Commission if it wishes to:

be eligible for tax exemptions
become a registered charitable entity.

Who can register?

An organisation can register if:

it is established and maintained for charitable purposes
it is not for the private profit of any individual or group
it has a name that complies with the Act
all the officers of the organisation are qualified to be officers under the Act.

Provision for group registration

The Act allows the Commission to treat a group of charities as if they were a single entity. The Commission must be satisfied that:

each of the organisations within the group qualifies for registration as a charity
the organisations are sufficiently closely related
it is fit and proper to treat the organisations as forming part of a group.

The Commission must also look at the extent to which the organisations have similar charitable purposes.

Definition of charitable purpose

The Commission uses the well-established common law test for charitable purposes. According to the test, the rules of an organisation must 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.

The charity’s object must also be of benefit to the public (public benefit test).

An organisation may qualify for registration if it has a secondary or supplementary non-charitable function (such as advocacy) as part of its charitable purpose.

Registration requirements

To register, organisations have to:

complete an application form, which includes information about their current and proposed charitable activities
submit a copy of their rules, constitution, trust document or similar
certify the officers of the organisation by completing an Officer Certification Form.

Once registered, organisations need to:

file an Annual Return within six months of their balance date
notify the Commission within three months if certain information about their organisation changes.

The Commission helps charities to register by:

providing guidelines on how to apply
providing up-to-date information about registration
ensuring that the information on the Register meets the requirements of the Act.

Enforcement of registration requirements

If a registered charity does not comply with the Act, the Commission has the authority to:

impose administrative penalties
issue warning notices
publicise any non-compliance
undertake further investigations
deregister charities that have seriously or repeatedly failed to comply with the Act.

The Commission also has the authority to check that registered charities are fulfilling their described purpose and complying with the Act.

How to register

Applications can be made online or by using paper versions of the forms.

The Commission runs an ongoing education and information programme to assist organisations wishing to register.

Cost of registration

Applying for registration is free.

Fee for filing Annual Returns

There is a fee for filing Annual Returns for charities with a gross annual income of more than $10,000.

The fee is:

$51.11 for filing a form online
$76.67 for filing a paper form.

Charities with an annual income of $10,000 or less don’t have to pay the fee.

Inland Revenue responsibilities

Inland Revenue remains responsible for administering the revenue acts and retains the right to audit charities to ensure they continue to be eligible for tax exemptions. Inland Revenue also remains responsible for assessing donee status (donations to a charity that are eligible for rebates and deductions).

Charities registered under the Charities Act are generally eligible for exemptions from income tax on some, or all, of their income.

They do not need to apply to Inland Revenue for those exemptions.

Once registered, they receive information from Inland Revenue outlining the exemptions they are entitled to and what they have to do to comply with the requirements for the exemptions.

Inland Revenue has published Operational Statement OS 06/02 Interaction of tax and charities rules, covering tax exemption and donee status, which provides more information about the requirements for income tax exemption and donee status. You can get a copy of this statement from www.ird.govt.nz

For more information about charitable tax exemptions, please contact Inland Revenue on 0800 377 774.

Further information

You can see a copy of the Charities Act 2005 at www.legislation.govt.nz or buy a copy from any Bennetts bookshop.

If you wish to subscribe to the Commission’s regular Update newsletter, simply add your email address to the newsletter group.