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Should you register your marae as a charity?
Updated July 2011
Looking to the future
Titiro whakamuri hei arahi i nga uaratanga kei te kimihia.
Look to the past for guidance and seek out what is needed.
This information is for people involved in the governance of marae. It outlines things to consider when making a decision whether to register the marae as a charity under the Charities Act 2005.
If your marae is not receiving any income other than koha and grants for capital works, there may be no need to register under the Charities Act.
Charitable tax status
Understand the current tax status of your marae.
A key incentive for marae to register under the Charities Act is to obtain charitable tax status. Marae registered as charities and with charitable tax status do not have to file an income tax return or pay income tax.
To check if your marae has charitable tax status you can speak with an Inland Revenue Kaitakawaenga Maori officer at your nearest Inland Revenue office.
The benefits of registration
Apart from tax benefits, marae receive other benefits from being listed on the Charities Register, including satisfying the requirements of funders that can only fund registered charities.
If your marae has a website and you would like the address to appear on your Register page, we set up the website address as a live link. People can then access your website directly.
If your marae doesn't have a website, then by being on the Register it will at least have an internet presence. People can find out about its current trustees, recent activities and other information.
Our information sheet The Charities Register: Benefits for charities has more details.
If you are expecting your marae to receive new income, and it is not registered as a charity with Charities Services, your marae may need to pay income tax.
Looking to the future
This is a good time for trustees of marae to think about future opportunities for their activities and income, and how these may affect their tax liabilities and opportunities for development.
Things to consider include:
- money expected from new sources, such as post-settlement entities, fisheries assets, resource use, or forestry investments
- any activities or businesses you are thinking about running from the marae
- possible improvements to buildings
- plans to put new buildings on reservation land
- opportunities to improve contact between your people and the marae. For example - are you developing a website so whanau can keep up to date with news from the marae?
If you are intending to start running new activities from the marae, or to start making grants to your whanau to assist with education, health, or other needs (to fulfil your stated charitable purpose), it is important to consider how those activities will affect the marae's tax liability.
Generally, the marae doesn't have to pay income tax on koha or grants you've received that are for a particular purpose, like redeveloping the wharekai.
If your marae receives money and isn't registered as a charity with Charities Services, it will need to file tax returns with Inland Revenue, and may need to pay income tax.
In relation to your marae, what is your current tax status?
It's important to understand the current tax status of your marae and know where any income is coming from.
Important questions to answer include:
- is your marae currently registered with Charities Services?
- does your marae have an IRD number?
- is it registered for GST?
- is the only money coming into the marae from koha or grants?
- is the marae receiving income from hire fees or rents from kaumatua flats?
- are any money-making activities being held on the marae?
- are you aware of payroll giving? It could be an option for your marae to receive donations.
Registered charities are generally exempt from paying income tax.
They are also entitled to a Resident Withholding Tax (RWT) certificate of exemption from Inland Revenue.
This means they don't have to pay tax on interest earned from bank accounts or other investments.
If your marae already has donee status, it doesn't need to register with Charities Services to continue to be treated as a donee organisation by Inland Revenue. (Donee status lets people claim back one third of any donations to the marae, up to the amount of their taxable income.)
See our information sheet Tax and donee status for more details.
What does being listed on the Charities Register mean?
The Register is a 'live' online database that can be accessed by anyone that wants to look at it.
Funders and others use the Register to access charities' financial and other information, including their rules documents, and information about the number of paid and volunteer staff and finances. This helps them make decisions about funding applications.
The public can search the Register online to find out information about a registered charity.
If you would like to register your marae, register online or contact us on 0508 242 748.
Helpful tip - marae that are registered with Charities Services aren't required to file an income tax return with Inland Revenue.
What must you do to stay registered?
Once registered, you must file an Annual Return with Charities Services each year, and notify Charities Services if certain important changes take place. The Annual Return must be accompanied by a copy of the marae's financial statements.
Some marae have failed to file their Annual Returns. We remove charities that do not file their Annual Return from the Register, which means they lose the tax exemption and other benefits.
For charities whose gross income is $10,000 or more, there is a fee for filing an Annual Return. Filing an Annual Return on a paper form is $76.67. Filing an Annual Return online is $51.11.
Our information sheet Annual Returns under the Charities Act has more details.
Don't assume you have charitable tax exemption because you have a letter of approval from Inland Revenue. These letters have not been valid since 1 July 2008, when the tax law changed.
Together, Charities Services and Inland Revenue are talking with marae trustees and governors about the benefits marae can gain from being on the Register - including eligibility for charitable tax status.
- you must register your marae under the Charities Act if you wish it to become a "tax charity"
- the Register is a 'live' online database that can be accessed by anyone that wants to look at it
- apart from tax benefits, marae can receive other benefits by being listed on the Register
- the Charities Act requires all charities registered with Charities Services to file an Annual Return
To clarify the tax liability of your marae, contact Inland Revenue at www.ird.govt.nz/contact-us
Inland Revenue has published Information for marae on their website, which outlines the kinds of taxes that governors of marae need to be aware of.
If you have read this information but are still unsure about your marae's tax responsibilities, you should contact a Kaitakawaenga Maori officer at your nearest Inland Revenue office.