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IRD seeks feedback on guidance for donation tax credits

Inland Revenue seeks feedback on guidance for school donation tax credits

08 MARCH 2018

Schools and parents are being invited to submit feedback on draft guidance for the tax implications of donations and other payments made to schools.

Inland Revenue is seeking to clarify the rules for state and state integrated schools over what is a donation and what’s a payment for goods or services.

Payments that are donations qualify for a 33% refundable tax credit.

Public Rulings Director Susan Price says this guidance aims to make it easier for schools to decide when to issue a donation tax receipt to parents.

“This guidance follows the Ministry of Education’s guidelines about the types of payments schools can ask for from parents. It makes it clear that a donation is a gift made voluntarily to benefit the school.”

The guidance is illustrated with easy-to-apply examples of situations that do and don’t qualify for a tax credit.

Payments to schools for general purposes are usually donations but when it comes to purchasing stationery, for example, for a student’s personal use - that can’t be considered a gift.

The same rules apply for the purchase of optional extras that aren’t part of a school’s curriculum.

Schools may sometimes ask for a contribution towards the cost of a field trip. A student can’t be prevented from attending if the outing is part of the curriculum, so a payment to help the school run the trip will qualify as a donation as long as it’s voluntary.

“We would be interested in hearing feedback from schools and parents about whether there are any situations we’ve missed or where the application of the rules remains unclear,” Ms Price says.

The draft guidance for state schools is available here: PUB00288-State-schools.pdf and for state integrated schools here: PUB00288+State+integrated+schools2.pdf


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