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New Zealand: McClay Discusses NZ's NFP Tax System

13 August 2013   (0 Comments)
Posted by: Author: Mary Swire
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Author: Mary Swire

The New Zealand Government has "always supported" the not-for-profit sector through the tax system, Todd McClay has said.

Speaking at the Fundraising Institute of New Zealand's Annual Conference, the Revenue Minister said that the Government "has demonstrated the value it places on the sector by introducing tax incentives to provide financial support for the sector and simplifying policies to facilitate charitable giving."

McClay also ran through the manner in which tax policies are developed. He explained that, generally, the decision to grant tax support is "based on the concept that the services that not-for-profit organizations provide are complementary to the programs that the Government provides as part of its social objectives."

In this, simplicity is key. By avoiding the imposition of excessive compliance costs on the sector, and ensuring that rules are as simple as possible, the Government hopes that it can encourage compliance. Similarly, the Government keeps a close eye on the integrity of the tax system. As McClay elaborated, "the Government has to weigh up what is good for the integrity of the tax system versus the will of society."

When drawing up policies, the Government follows the Generic Tax Policy Process (GTPP), and considers "the effect they would have on the growth of the charitable and non-profit sector in New Zealand and the resulting benefits to New Zealand." It investigates both the fairness and the costs of potential measures, and aims at protecting revenue streams.

Looking forward, McClay said that the Government will focus "on refinement and improvement of the overall integrity and coherence of the charitable income tax exemption and the tax incentives for charitable donations." Among the initiatives earmarked are the improvement of the process for approving overseas-focussed charities, the solution of technical problems relating to donor organization requirements, and a new approach to transactions where there has not been a "true gift."

Together with the Finance Minister, McClay will determine the timing of this work, and set the next 18-month tax policy work program. McClay urged attendees "to take advantage of opportunities to comment where tax policy proposals affect your work."



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.

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