Registered Charities

Tax status

A change to the tax law that came into effect on 1 July 2008 says that a charity must be a "tax charity" to be eligible for tax exemptions on charitable grounds.

The key way to be a "tax charity" is to be registered with us (under the Charities Act).

While we decide if an organisation qualifies for registration as a charity, Inland Revenue will continue to administer charitable tax exemptions. These include exemptions from income tax and exemptions from gift duty for people who give gifts to charitable entities. Generally, Inland Revenue accepts the Commission's decision so that registration will, in most cases, lead to tax exemption.

Many charities registered with us, previously had charitable tax exemptions and had letters from Inland Revenue confirming their tax exemptions on charitable grounds. Because those letters pre-date the change to the tax law, they are no longer relevant.

How will we know that our charity has tax exemption?

When we register your charity we will send you a registration certificate. Inland Revenue has asked us to include its guide —   Tax information for charities registered under the Charities Act 2005 (IR256) (PDF), with your certificate.

IR256 and more detailed information about tax exemptions are also available on Inland Revenue's website www.ird.govt.nz.

In most cases, charities that are registered under the Charities Act and have non-business income only — for example, investment income such as interest and dividends — will be eligible for exemptions. Registered charities carrying on a business will need to refer to the information they receive from Inland Revenue.

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What are our tax liabilities under the Charities Act?

Tax charities are eligible to be exempt from income tax and resident withholding tax, and donors of gifts to them don't have to pay gift duty.

The requirement to be a "tax charity" came into effect on 1 July 2008. Charities that applied for registration with us after that date may be liable to pay income tax on income and resident withholding tax on their investment income for the period between 1 July 2008 and their date of registration.

If your organisation has not yet applied for registration or your effective registration date is later than 1 July 2008 you should contact Inland Revenue to talk about your tax liabilities. This applies to your charity even if you have a letter from Inland Revenue and have claimed tax exemptions in the past.

Income Tax

Inland Revenue has income tax information for charitable organisations, including a chart of tax rates, and an explanation of how (if necessary) to apply for exemption from Resident Withholding Tax (RWT).

Tax rules

Keeping it Legal has a   tax rules fact sheet (PDF) that gives an overview of some of the main tax rules that apply to various types of organisations. It also explains how organisations can become tax-exempt.

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Does my charity have to be registered with you to get donee status?

No. Inland Revenue continues to administer donee status. Organisations don't need to be registered with the Charities Commission to get donee status.

Individuals can claim a tax rebate for a donation they make to an organisation that has donee status. Companies and Māori authorities can claim a deduction for donations to an organisation with donee status.

If your organisation would like donee status, and you don't want to register it under the Charities Act, you can apply for donee status directly to Inland Revenue.

If your organisation already has donee status, it doesn't need to register with the Commission to continue to be treated as a donee organisation by Inland Revenue.

However, if you are going to register with us you won't have to make a separate application to Inland Revenue for donee status.

This is because there is a question in our application form relating to donations. If you get or intend to get donations you can tell us that in your application by ticking the appropriate box. Inland Revenue will use that information to work out or reconfirm your donee status and send you a letter about it.

If you spend money delivering your charitable purpose overseas (providing disaster relief, delivering aid and so on) Inland Revenue will assess your eligibility for donee status differently. Refer to Inland Revenue's website for more details about overseas donee status.

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What information do we need to put on a receipt for a donor?

Donation receipts need to show:

Getting a replacement receipt

If a donor needs a replacement receipt, the same information needs to be on it as on the original receipt. The word "Copy" or "Replacement" should be clearly visible on the receipt.

If a donee organisation issues a receipt that has later been refunded, they must advise the donor to destroy the receipt. If the donor has already made the claim for the donation, the donor must advise Inland Revenue, as their tax credit (formerly called a "rebate") will need to be adjusted.

While it is not a requirement to put your charities registration number on receipts, the Commission encourages you to use this number on all promotional material.

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Do we need to inform Inland Revenue that we have registered?

No. We will tell Inland Revenue when we register your charity. We will also tell them if your organisation is de-registered for any reason.

You'll only need to contact Inland Revenue if you need to file a tax return because you think you have taxable income.

You'll also need to contact them if you have any other tax matters — for example, GST, PAYE, or you need to update your address or other records for any reason.

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There is a clause in our rules that says we must tell Inland Revenue about certain changes. Is this still relevant?

No. Some organisations have a clause in their rules that stops them making changes to their charitable objects, personal benefit and winding-up clauses without first getting Inland Revenue's approval. However, Inland Revenue has agreed that these types of clauses can be removed.

You should note that:

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