Government Opens Consultation on Taxation of Charities and Not-for-Profits

Finance Minister Nicola Willis emphasized the Government’s commitment to both a strong charitable sector and a fair, transparent tax system.

New Zealanders now have the opportunity to provide feedback on the taxation framework for charities and not-for-profit organisations, as the Government launches a public consultation on an Inland Revenue Issues Paper today.

Ensuring Fairness and Transparency in Charitable Taxation

Finance Minister Nicola Willis emphasized the Government's commitment to both a strong charitable sector and a fair, transparent tax system.

"New Zealand not-for-profits make a significant contribution to our communities, and the Government provides tax relief to organisations that meet certain requirements," Ms. Willis said. "However, it's important that the public has confidence in these tax concessions and that they deliver genuine benefits to society."

Proposed Changes: Simplifying Rules & Addressing Tax Integrity Risks

Revenue Minister Simon Watts highlighted that the consultation will explore options to simplify tax rules, reduce compliance costs, and address tax integrity risks.

Key areas of focus include:✔ Charity business income tax exemptions – Reviewing whether charities should continue to enjoy tax-free income on business activities.✔ Donor-controlled charities – Examining rules to prevent tax loopholes where donors exert significant control over charitable funds.✔ Integrity and simplification – Streamlining tax rules to reduce administrative burdens while maintaining public trust.

Public Consultation Open Until March 31, 2025

The Government is actively seeking public submissions on these proposals. Mr. Watts reassured New Zealanders that no decisions have been made yet, and all feedback will be carefully considered.

"We want to ensure our tax settings are fit-for-purpose and serve the best interests of both the public and the charity sector," he said.

The full consultation document is available online, with submissions open until March 31, 2025.

For more details and to have your say, visit the Inland Revenue website.