The IRD has released a consultation document examining the tax treatment of the not-for-profit sector in New Zealand. This review could lead to significant changes in how not-for-profits are taxed, particularly those operating businesses. If you’re involved in a charity, incorporated society, or other not-for-profit entity, now is the time to understand these potential changes and provide your input.
What’s in the IRD’s consultation document?
The consultation document explores issues such as:
- Whether not-for-profits that run businesses should continue to have tax exemptions.
- How tax reporting requirements should be structured to ensure greater transparency.
- Whether certain organisations currently benefiting from tax-free status should be subject to income tax.
- How compliance obligations could change for the sector.
The government is considering these changes to ensure fairness in the tax system and to address concerns that some commercial businesses operating under the not-for-profit umbrella have an unfair tax advantage. The proposals could significantly impact how charities and not-for-profits manage their finances and plan for the future.
Why this matters
If your organisation is in the not-for-profit sector, these potential tax changes could affect your financial sustainability. It’s essential to understand how the proposed reforms might impact you and to have your say before any decisions are made.
Make a submission
The IRD is seeking feedback from organisations and individuals in the sector. If you want to ensure that your concerns are considered, we highly recommend reading the full document here and making a submission before the deadline of 31 March 2025.
As accountants who work with not-for-profits, we can help you understand the potential impacts of these proposals on your organisation. If you have any questions, feel free to get in touch.