NZ Federation of Voluntary Welfare Organisation submission on tax and charities discussion document
The summary and recommendations of the New Zealand Federation of Voluntary Welfare Organisation's submission on the tax and charities discussion document.
A copy of the full submission is available at the bottom of this page.
General comments
The New Zealand Federation of Voluntary Welfare Organisations (the Federation) is a national umbrella organisation for voluntary welfare organisations, with 120 members agencies involved in a wide range of welfare, health, education and community services. All members are registered as charities for the purposes of the Income Tax Act, and include many of New Zealand's major charities.
In addition to acting on behalf of its members, the Federation provides a range of information and advice services to social service organisations in New Zealand, and provides a recognised voice for the voluntary sector.
It was evident to us when we received this paper in June, that it has widespread implications for our membership and the sector as a whole. We have been concerned since that time to ensure that there was an opportunity to consider and debate the issues it raises, and so we initiated a project with other interested umbrella organisations to run a series of seven regional forums to discuss this paper.
We appreciated the attendance of officials from Treasury and Inland Revenue at these forums, which we consider were considerably stronger for the experience and skill that the officials demonstrated. We are very aware that these meetings could only provide an initial response to complex issues, and that while we reached approximately 500 people and agencies, that many are not yet involved, and there has not been sufficient time to develop considered discussion, rather than reactive responses to the issues raised.
Since running these forums, we have been liaising with our members and other national organisations to ensure that there is some opportunity to consider the broader implications of this paper for a range of organisations in our sector.
We are aware that the paper raises long-term issues, which cannot be answered within the prescribed timeframe and process. In considering our response to the discussion paper, we are recommending a joint working party process to more adequately consider key issues, and suggest an approach to the specific proposals that is consistent with this recommendation.
Recommendations
1. It is not appropriate to undertake change in definition of "charitable purpose" at this time.
The definition requires consideration as part of further work on registration and reporting processes, with particular consideration of the implications of community development activities, and the growth and development of Maori services in the voluntary sector.
2. A system for registration, reporting and monitoring is supported. We consider that further work is needed to adequately consider a possible range of functions, as well as possible structures and funding for such a body.
This could be developed by a joint working party of people from the sector, and officials from a number of key government agencies, and linked to wider processes considering the relationship between the voluntary sector and Government.
There is a timely opportunity to undertake this work in conjunction with cross-departmental initiatives outlined in the Report of the Community and Voluntary sector working party.
3. That the proposal to tax trading activities (as outlined in 9.8) is not proceeded with.
The issue of processes for determining appropriate mechanisms for monitoring the accumulation of capital are an issue for the proposed working party.
4. Charities with purposes outside New Zealand should be included in future registration and reporting systems.
5. The formula, rather than the prescribed level, for determining effective level of rebate on donations be considered at a later stage, when more information is available.
6. Tax credits on imputation dividends are considered along with the rebate level at a later stage, when more information is available.
7. Fringe Benefit Tax concessions remain as they are at present.
8. The tax-exempt status of superannuation schemes remains as it is at present.
9. Clarification of the claiming credit for expenses of non-taxable activities is proceeded with.
Full copy of NZFVWO tax and charities submission (PDF 844 KB).
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