The importance of knowing your reporting tier

Published 07 April 2026

Do you know your tier? 

The reporting tier a charity uses is usually decided when the Performance Report or Financial Statements are prepared. The tier is based on factors such as whether the charity has public accountability, the type of accounting it uses, and its annual expenses or operating payments. Generally, the largest charities are Tier 1 and the smallest charities are Tier 4.

Charities Services has created a flow chart to help charities work out which tier applies to them.

Why it’s important to know your tier 

It's important to know your tier so you use it correctly in your performance report and in your annual return. This information appears on the Charities Register and is used by funders, researchers, and the public to learn more and decide where to donate. Knowing your tier will provide accuracy that helps your charity and others who rely on the information you provide.

Choosing the tier in the annual return 

When completing an annual return online, charities need to select a reporting tier on the Financial Information tab. This tier directly relates to the accounting standard used to prepare the performance report.

What if I don’t have a performance report?

A performance report is required for all annual filings. The only exception is when a charity chooses to file a Combined Tier 4 Annual Return, which merges the performance report with the annual return. This option is only available for small Tier 4 charities that meet all the following conditions:

  • Do not have public accountability
  • Use cash basis accounting
  • Have expenses below $140,000 if filing an annual return for the first time, OR, if they have filed before, had expenses below $140,000 in at least one of the previous two years.

Where do I find the standard used in my performance report?

All performance reports include a Notes section after the financial activity section. The first item in the Notes usually describes the accounting standard used to prepare your reporting. This is often listed under headings such as Basis of Preparation or Statement of Compliance.

If a charity is preparing a performance report for the first time, it can use a template that provides guidance on how to complete each section of the report. Tier 4 template and guidance here and Tier 3 template and guidance here.

Examples of Basis of Preparation notes:

Tier 4 Performance Report

Notes

The organisation preparing this performance report is permitted by applicable legislation to apply the Tier 4 (NFP) Standard issued by the External Reporting Board (XRB) and the organisation has elected to use this Standard. All transactions included in the Statement of Cash Received and Cash Paid and related notes to the Performance Report have been reported on a cash basis.

Tier 3 Performance Report

Statement of accounting policies
Basis of Preparation

This Performance Report is prepared in accordance with the XRB’s Tier 3 (NFP) Standard. The entity is eligible to apply these requirements as it does not have public accountability and has total annual expenses of less than $5 million. All transactions in the Performance Report are reported using the accrual basis of accounting.

Tier 2 Financial Statements

Basis of preparation and statement of compliance

The financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (NZ GAAP). They comply with New Zealand equivalents to International public Sector Accounting Standards – Reduced Disclosure Regime (PBE IPSAS RDR) and other applicable Financial Reporting Standards as appropriate to Public Benefit Entities (PBE), as issued by the External Reporting Board (XRB). The entity is eligible to report in accordance with PBE IPSAS RDR on the basis that it does not have public accountability, and annual expenditure does not exceed $33 million.

Tier 1 Financial Statements

Basis of preparation and statement of compliance

The financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). For the purposes of complying with GAAP, the entity is a public benefit entity. The financial statements have been prepared in accordance with Tier 1 Public Benefit Entity (PBE) Accounting Standards as issued by the New Zealand External Reporting Board (XRB). They comply with the New Zealand equivalents to International Public Sector Accounting Standards (NZ IPSAS) and other applicable Financial Reporting Standards as appropriate to Public Benefit Entities.

What if I don’t see any of these phrases?

First, check if your Performance Report or Financial Statements has a Notes section, and if so, what information is listed there. If you see the phrase Special Purpose Accounts, your performance report is not suitable for your Charities Services annual filing.

If you have used an external accountant to prepare your performance report, ask them to help you find the correct phrase in the Notes section.

If you have tried the above and are still unsure, please email us at info@dia.govt.nz. We can help you figure out your reporting tier.