A social enterprise that supports thousands of non-profits across the country, LEAD Centre for Not for Profit Governance and Leadership, is sounding the alarm on an unprecedented tax and fee grab from the country’s voluntary and community organisations.

LEAD co-director, Garth Nowland-Foreman, asked today, “What has this government got against community groups and member associations? And where is the Minister for Community & Voluntary Sector, when a regulatory barrage is being unleashed on the sector?”

“At a time when social cohesion in this country has dropped below that of our Australian neighbours, membership associations are one of the most important vehicles in helping to build stronger communities, practice democracy, and support social cohesion.”

Tax on Charities’ earned income

First, the government tried to tax charities, and while now been put on hold for this Budget (because it would be excessively complicated, add compliance costs, and still not raise any significant revenue), the threat still hangs over the heads of thousands of charities. And Charity Services is requiring charities to separately list so-called “commercial” income in this year’s annual returns.

Tax on Associations’ membership fees

Inland Revenue now proposes to impose income tax for the first time on subscriptions and other transactions among members of community associations (ED0265). This will overturn a 70-year-old tax understanding of the “principle of mutuality”, with tax specialists warning it could threaten the existence of some small clubs and societies.

Fees hike for Incorporated Societies

At the same time the Companies Office is ignoring the public-good contribution of these same non-profit associations, with a major hike in one fee, and the introduction of three new fees for incorporated societies, including one that for the first time will need to be paid every year in perpetuity (Review of Companies Office Fees and Levies, 2025).

Following funding cuts and increased compliance

LEAD co-director, Sandy Thompson, said: “This follows cutbacks in funding for many non-profits doing important work in the community. Many are still grappling with a new Incorporated Societies Act, which itself imposes increased compliance costs, and is demanding thousands of incorporated societies across the country re-register with new constitutions by April next year or risk loosing any legal protection.

“While individually, each of these threats may not appear monumental, taken together it’s hard for community groups not to feel under attack, just at a time we should be supporting them even more.”

Background information:

Shamubeel Eaqub & Rosie Collins, Social Cohesion in New Zealand (April 2025)

https://helenclark.foundation/publications-and-medias/social-cohesion-in-new-zealand/

Tax on Charities:

https://www.taxpolicy.ird.govt.nz/consultation/2025/taxation-and-the-not-for-profit-sector

https://www.rnz.co.nz/news/political/559338/1b-cut-to-operating-allowance-coming-in-budget-nicola-willis-says

Tax on membership fees:

https://www.taxtechnical.ird.govt.nz/-/media/project/ir/tt/pdfs/consultations/current-consultations/ed0265.pdf

https://www.thepress.co.nz/business/360687070/proposal-tax-membership-fees-could-imperil-thousands-small-incorporated-societies

https://bakertillysr.nz/news/proposal-could-lead-to-breaking-point-for-small-clubs-and-societies/

Increased fees for Incorporated societies:

https://www.mbie.govt.nz/business-and-employment/business/regulating-entities/review-of-new-zealand-companies-office-fees-and-levies-2025

Complying with new Incorporated Societies Act:

https://www.rnz.co.nz/news/national/559438/thousands-of-community-clubs-yet-to-comply-with-new-incorporated-societies-legislation

Cuts to Charities’ funding:

https://www.rnz.co.nz/news/national/537310/funding-cuts-to-charity-particularly-felt-over-christmas-period

https://www.nzdoctor.co.nz/article/news/mental-health-foundation-laying-18-staff-other-charities-also-facing-cuts

https://www.huie.org.nz/news/community-organisations-left-running-on-empty-hui-e-community-aotearoa-on-budget-2024/

Who is LEAD?

LEAD Centre for Not for Profit Governance & Leadership was established ten years ago to provide evidence-based training, coaching and other support to not-for-profit organisations and their leaders across Aotearoa New Zealand and the Pacific. In that time thousands of leaders and their organisations have been assisted by its consortium of highly expert and experienced not-for-profit consultants and facilitators.

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