Payroll giving and your charity
Updated January 2010
Payroll giving is a voluntary scheme that enables people to make donations directly from their pay to a chosen "donee organisation". People who donate through payroll giving receive immediate tax credits relating to the donations they make each payday.
What is payroll giving?
Payroll giving is a voluntary scheme that enables people to make donations directly from their pay to a chosen "donee organisation".
The scheme is administered through Inland Revenue's PAYE tax system. Employers who electronically file their employer monthly schedule and deduction using Inland Revenue's ir-File can sign up for the scheme and make it available to their staff.
Then, if they wish, staff members can make donations directly from their pay to the donee organisations of their choice.
People who donate through payroll giving receive tax credits relating to the donations they make each payday. This means they no longer have to wait to claim tax credits at the end of the tax year.
However, they can still claim for any donations they make outside the new payroll scheme.
Helpful tip – your charity must be a "donee organisation" in order for people to donate to it via payroll giving.
Return to top
What is a "donee organisation"?
A "donee organisation" is an organisation approved by Inland Revenue to have donee status. Individuals can get a tax credit if they donate money to an approved donee organisation. Companies and Māori authorities can claim a deduction for donations to a donee organisation.
Being on the Charities Register does not automatically qualify your charity as a donee organisation. Inland Revenue approves donee status.
See our information sheet Tax- How the Charities Act affects your tax status.
Return to top
How can you check that your charity is an approved donee organisation?
You can check the approved donee organisations list at Inland Revenue's website www.ird.govt.nz/donee-organisations/
Your charity must be on the donee list in order for people to donate to it via payroll giving.
Helpful tip – if your charity is not on the donee list you can apply in writing to Inland Revenue.
Visit www.ird.govt.nz/doneeorganisations/ or if you don't have internet access phone them on 0800 227 774.
Return to top
Are all the charities on the Charities Register donee organisations?
No. Being on the Charities Register (registered under the Charities Act) does not automatically qualify a charity as a donee organisation.
Organisations don't have to be on the Charities Register to be approved by Inland Revenue for donee status.
Return to top
Issuing receipts for payroll donations
Charities should issue a receipt in the employer's business name.
Receipts should not be issued to the individual donor.
The donor doesn't need receipts for donations made through their payroll because they don't have to claim the tax credit. Instead, their pay slip will show the amount of the donation made and the tax credit received. Inland Revenue has more information about how to receipt payroll donations and other donations at www.ird.govt.nz/doneeorganisations/
Return to top
What do donors get out of donating via payroll giving as opposed to making donations in other ways?
With payroll giving, donors don't need to collect receipts and wait until the end of the tax year to claim their tax credit. Instead, their employer will calculate the tax credit they're entitled to each payday that they make a donation. So their take home pay will include any relevant tax credits.
Return to top
How will your charity make its bank account details available to potential payroll donors?
If you don't already do so, you may like to consider including your bank account details on your website or in your publicity brochures.
You may also find it useful to have a standard "payroll giving" letter or form available, including your charity's bank account information, so that potential donors can give it to their employer when they ask them to set up their payroll donations.
Return to top
How will your charity thank or add payroll donors to its donor database?
An employer only needs to forward the donation amount to your charity; they don't have to provide you with details of individual donors.
The Office for the Community and Voluntary Sector website www.ocvs.govt.nz has tips and ideas about working with payroll giving donors and employers.
Return to top
Inland Revenue's list of donee organisations does not include contact details or other information about them.
When promoting your charity to potential payroll giving donors and employers, you may wish to refer them to your entry on the Charities Register, so they can be assured your charity is wholly and exclusively charitable, and find valuable information about your purposes, rules, officers, beneficiaries and finances.
Helpful tip – check your charity's entry on the Charities Register to be sure your contact details and other information are up to date, so donors and supporters can easily contact you.
Charities Services recommends including your unique charity registration number on all your promotional materials, so potential donors and supporters can easily find information about you.
Return to top
Inland Revenue has full information on their website www.ird.govt.nz
The Office for the Community and Voluntary sector also has information available at www.ocvs.govt.nz including useful tips for donee organisations.
Return to top
Employers seeking to establish payroll giving schemes in their workplace can find helpful information at www.payrollgivinginfo.org.nz.
Return to top
