Charities Commission - New Rules

New Charities Commission affects NGOs

If you are one of the 35-40,000 charitable organisations in New Zealand, you will be affected by the newly formed Charities Commission that came into being on July 1.

Registration with the commission is voluntary, but if you want to retain your tax free status with the IRD  you will have to be registered.

Registration will be required by 1st April 2007, to achieve tax free status for that entire year.

When registering, organisations will need to;

• Submit a copy of their rules, constitution etc
• Provide information about their current and proposed activities
• Name officers and provide a declaration that officers are not disqualified from holding office
• Provide specified information

Acceptance of registration will be focused on activities rather than aims.

The likely focus for groups involved in waste will be public benefit.  It is unclear how this will apply to small self-help groups. Other traditional areas of charitable activity are relief of poverty, religion and education.

If charities receive gifts, that gift will be exempt if at the time of the gift the charity is registered.

Several related charities can register as a group, but they will have to report their finances as one entity.

You may have a letter of comfort from the IRD confirming your tax free status. These will no longer be provided, and will become redundant.

Registered charities will have to pay an annual fee and file an annual return. Work is ongoing with the IRD to achieve a one-stop shop approach to minimize compliance costs.

There is development going on in the kind of financial reports needed. Available from the Ministry of Economic Development is 'Review of Financial Reporting Act 1993' ISBN 0 478 26361 9 which was issued in November 2004.

The government has determined that registration will be free, and that annual return fees will initially be $50 for online filing and $75 for paper based filing of returns.

There is a provision for an exemption from all fees for a small registered charity (under $10,000 income). The real cost could be in time needed for the preparation of accounts and reports.

For further detai ls visit www.charities.govt.nz , www.ird.govt.nz, and www.med.govt.nz