Recent tax changes for Tertiary Education Institutions, Schools, and Non-Resident Charities
Charities Commission ,
The government has announced that state-funded tertiary education institutions, state and integrated schools, and non-resident charities will not have to register with the Charities Commission to retain their tax-exempt status.
The legislation will also introduce a transitional measure, to be used in limited circumstances, to protect the tax-exempt status of organisations that run into difficulty with completing their registration applications before the deadline.
A brief outline of how the changes will effect each organisation is below. If you require any further information, please contact Inland Revenue (www.ird.govt.nz).
Tertiary education institutions
Tertiary education institutions do not have to register with the Charities Commission to retain their tax-exempt status. The Income Tax Act and the Estate and Gift Duties Act are being amended to clarify that tertiary education institutions are exempt from income tax and from gift duty.
The provisions, which have built-in safeguards to prevent private pecuniary benefit, apply to institutions set out in the Education Act, like universities, polytechnics, specialist colleges, and wananga. Tertiary institutions will automatically have Inland Revenue-approved donee status, so that people who donate money to them will continue to qualify for tax rebates for their donations.
Schools
State and state integrated schools do not need to register with the Charities Commission to be exempt from income tax as they already have a specific exemption in the Education Act. The Estate and Gift Duties Act is being amended so state and state integrated schools are exempt from gift duty, subject to safeguards to prevent private pecuniary benefit. They will also have automatic IRD-approved donee status, so that people who make cash donations to them will continue to qualify for tax rebates.
Non-resident charities
Some non-resident charities may not be able to register with the Charities Commission because they are not established in New Zealand and have no strong connection with New Zealand. The Income Tax Act will be amended to ensure these charities will be able to have tax-exempt status here, subject to Inland Revenue approval. The Estate and Gift Duties Act is being amended so non-resident charities will be exempt from gift duty if they are unable to register with the Charities Commission.