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Not for profit

Big tax changes for charities and donee organisations

Inland Revenue has been reviewing tax rules applicable to charitable and donee organisations (charitable entities to which donations are eligible for a 33% tax rebate).

IRD have released a statement which includes clarifications about the application of existing tax rules to these entities and areas for future legislative reform.  It’s likely this will have a significant impact on the sector.

Some tax legislation has already recently changed that may affect charities; this includes a new requirement that each entity have charitable registration to obtain business profit tax exemptions.

If your organisation currently relies on exemptions/tax concessions in the following areas, it’s a critical time of change and you should be aware of risks and opportunities:

  • Entities with charitable purpose which are not registered with the Charities Commission
  • Charities with subsidiary trading entities which are currently treating business profits from the trading entities as exempt income
  • Entities with a charitable purpose which are registered as donee organisations with Inland Revenue but apply funds wholly or in part to charitable purposes outside New Zealand

Changes are to apply from 1 April 2020, making the start of 2020 a key time for review and change for affected organisations. 

Our special offer for charities and donee organisations

Grant Thornton is offering a charities and donee organisation review; this is a fixed price package where we assess the tax affairs of entities potentially affected by the change.

The review highlights and summarises changes relevant to an entity and will include recommendations (if required) of process changes, or further reviews which should take place in light of the statement.

It will help you understand the risks and opportunities relating to these matters and will be suitable for communication to Governance groups as a discussion document. 

Register your interest for the review here