Tax changes welcome boost for NZ charities

Media release

United Way New Zealand

Friday 18 September 2009

Tax changes welcome boost for NZ charities hit by recession

“The latest tax breaks for charitable donations announced by the Government today will boost income for New Zealand charities. Given we’ve all taken a hit with the recession, the timing couldn’t actually be better,” says Don Oliver, chief executive of United Way - a leading New Zealand charity.

“These changes are long overdue. The previous regime of capped tax rebates and having to collect receipts and claim at the end of year was a huge disincentive to giving.”

“Promoting payroll giving by allowing individuals and businesses to get an immediate and substantial tax break is something countries like the United States have been doing for years. We have been behind the ball and subsequently New Zealand wage and salary earners have effectively been discouraged to give to charity. That has all changed now and the community will reap the rewards."     

Individuals can claim one-third of every dollar, or 33%, they donate up to the value their total annual income. Whereas previously refunds were limited to $630, no matter how much an individual donated. Businesses can now claim a tax refund of up to 100% of their charitable donation to the maximum value of their annual income.

Mr Oliver says the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act just passed by Parliament and announced by Revenue Minister Peter Dunne will encourage employers to get behind employees by potentially matching contributions, as well as support communities.

“Giving to charity is suddenly a whole lot more attractive for businesses going through a recession when you consider donations for businesses will now be 100% refundable. A lot of companies are committed to demonstrating corporate responsibility and community engagement. We’ll that’s just now got a lot easier to achieve.”

Mr Oliver says most importantly the before–tax pay roll giving system will enable employees to make regular financial contributions from their gross pay to charitable causes, which have donee status from the IRD, and receive an immediate tax benefit on their donations each payday. He predicts this change will see more employees and employers donating via the payroll but warns people to check out charities and the value they offer. 

“United Way is already working with corporates and businesses on payroll giving. Individuals and companies all around New Zealand already give to United Way for us to then decide which of their local communities will benefit. Through payroll-giving we already fund around 160 charities. With this legislation now passed, the money we will collect only will grow and that means stronger communities,” said Mr Oliver.

Ends

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