27 June 2001

Charities are outraged and frightened by the Government's plans to target them for the next tax grab, National's Revenue spokesperson Annabel Young said in Parliament tonight.

Revenue Minister Michael Cullen has released a discussion document 'tax and charities' which proposes changing the definition of a charity, charging charities tax on their business income and forcing massive compliance costs on charities.

"Charities are rallying against the Government's plans with a series of public meetings starting in Auckland next week," Annabel Young said.

"The Government's plans will hit small charities the hardest.

Key changes include:

* The definition of a charity is likely to change. Under Cullen's proposed rules some existing charities will be treated like an ordinary business. Charities will have to pay tax on their business income.

* All charities will face a mountain of compliance costs. Even small charities will have to file annual audited accounts and other returns.

* All charities face the threat that they will lose many of the tax benefits that they currently receive. Cullen wants to take Fringe Benefit Tax and superannuation benefits away from charities and treat them as if they are an ordinary business. The FBT costs alone would cripple charities.

The Government has promised legislation by the end on the year on the changes to charities. It would come into effect by the beginning of the 2003 tax year.

"This attack on charities comes in the International Year of the Volunteer. All of the hard work volunteers put into raising funds for charities will instead go to line the Government's pockets.

"The public meetings are a call to arms for charitable organisations and volunteers around New Zealand. New Zealanders must write to the Minister of Revenue expressing their fear of the charity tax," Annabel Young said.

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