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NZ Consults On Tax Status Of Deregistered Charities

19 July 2013   (0 Comments)
Posted by: Author: Mary Swire
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Author: Mary Swire

The New Zealand Government is consulting on proposals intended to offer greater clarity on the tax status of deregistered charities.

Registration as a charity is voluntary, but those that do can qualify for tax concessions, including tax-exempt status. However, a charity can face significant tax consequences if removed from the Department of Internal Affairs' Charities Register.

A new tax officials' consultation paper recommends that the Government clarify how the general tax rules apply to deregistered charities. These include the company, trust or other entity-specific regimes.

The paper also points to the need for establishing the opening values of any depreciable property, or consideration for any financial arrangements, held by a deregistered charity when it becomes a tax-paying entity. Finally, it urges the adoption of specific timing rules as to when these tax provisions apply.

The Government is seeking feedback on whether additional measures might be helpful to ensure that affected charities are aware of their tax obligations following deregistration.

Commenting on the paper, Revenue Minister Todd McClay said: "Given the importance of the charities sector in our communities it makes sense to look at how we ensure that rules around the tax-exempt status of charities are properly targeted and that when a charity is deregistered, it is clear about its new tax obligations."

"For the overwhelming majority of former charities who have genuinely tried to meet their registration requirements in good faith, the changes proposed will provide greater certainty about their new tax obligations."



WHY REGISTER WITH SAIT?

Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.

MINIMUM REQUIREMENTS TO REGISTER

The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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